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THE 



Distribution of Wealth; 

OR, THE 

ECONOMIC LAWS BY WHICH WAGES AND 
PROFITS ARE DETERMINED. 



THE LIMITATIONS ON WEALTH, THE CORRELATION OF 

WEALTH AND POVERTY— INTEREST— TAXATION 

— MONOPOLIES — PROTECTION AND 

FREE TRADE. 




BY y 

RUFUS COPE. 




PHILADELPHIA: |<. 

J. B. LIPPIlSrCOTT COMPANY. 

1890. 



377/ 



Copyright, 1890, by Rufus Cope. 






CONTENTS, 



CHAPTER I. 

PAGK 

Introduction 5 

CHAPTER II. 

Changed Conditions — Dependence of Labor on Capital — Increased 
Power of Accumulated Wealth 25 

CHAPTER III. 

Statistics of Production and Distribution, showing the Amount of 
Total Product and the Manner in which it is divided — Wages — 
Profits — Aggregation of Wealth — Statistics of Money ....... 36 

CHAPTER IV. 

Limitations on Wealth — The Correlation of Wealth and Poverty . . . 113 

CHAPTER V. 

Savings, represented by Durable Property — Nature, Effect, and 
Limit of 143 

CHAPTER VL 

Interest on Credits — Equity and Policy of — Effect of, on the Aggrega- 
tion of Wealth 168 

CHAPTER VIL 

Taxation, Direct and Indirect — Duties on Imports — Income Tax — Tax 
on Credits — Amount of, not of Principal Importance — Burden of, de- 
pends on how laid and how expended — -EflFect of, on Distribution 
of Wealth 192 

CHAPTER VIIL 

International Trade — Protection — The Extent to which International 
Exchange of Products is Profitable to the People — Doctrine of Free 
Trade — Protection — Principle involved in — Historical Review of — 
Bessemer Steel — A Tariff Commission — Foreign Immigration . . . 225 

3 



4 CONTENTS. 

CHAPTER IX. 

PAGE 

Monopolies, Natural and Artificial — State Control of — Trusts 274 

CHAPTER X. 

What makes tlie Eate of "Wages — Comments on Various Theories con- 



cerning 

CHAPTER XI. 



293 



Limitations on Profits — Remedies for Low Wages— What makes the 
Eate of Wages — Regulation by Statute — Eestrictions on Monopolies 
— A Low Eate of Interest — Limitations on the Ownership of Land . 310 

CHAPTER XIL 
Education of the People, Secular and Religious 342 



THE 

DISTRIBUTION OF WEALTH; 

OR, THE 

ECONOMIC LAWS BY WHICH WAGES AND PROFITS 
ARE DETERMINED. 



CHAPTEE I. 

INTRODUCTION. 



The first extended and systematic treatise on the subject of 
political economy was Adam Smith's " Wealth of Nations," pub- 
lished in 1776. Smith was followed, in 1803-17, by Malthus and 
Eicardo. These writers gave form and direction to the current 
of thought on political science, and what are now known as the 
orthodox views of political economy may be found definitely 
formulated in their writings. Their opinions, with little sub- 
stantial modification, still hold sway, and continue to shape the 
views of modern authors. 

Smith holds his position of authority by virtue of an ability 
which is unquestioned, a style that is forcible and clear, and 
the general soundness of his theories, to which he always ap- 
plies the test of practical illustration. 

Political science remained for many years in a stationary 
condition, and naturally fell into the custody of the college 
professor, who, for the most part, occupied himself with the 
task of interpreting what had already been written, rather 
than with new and original investigations. It appears to 
have been generally regarded as a completed science; and, 
as a consequence, the discussion of the subject more fre- 
quently degenerated into an inquiry into the exact limits of the 

5 



6 THE DISTRIBUTION OF WEALTH. 

old doctrines, and the most appropriate formulas for their ex- 
pression. It had reached that stage in the history of a science 
where terminology begins to overshadow substance, and hyper- 
criticism busies itself more about modes of expression than the 
thought expressed. The schoolman has a penchant for defini- 
tion. One of his leading aims appears to be to crowd subjects 
into formal definitions that exactly fit, touching at all points, and 
slack at none. It has in this manner come about that there are 
a host of writers who assume to be scientific and thorough, who 
are merely literary valet de chambres, supervising the verbal 
wardrobe of other men's ideas, — a service necessary, perhaps, to 
be attended to ; but it should not be forgotten that strained at- 
tempts at extreme accuracy of expression do not contribute to 
perspicuity. A writer who tasks himself with the work of 
giving expression to the doctrines of a complex science, in terms 
of such absolute exactness and completeness as to forestall 
quibblers who detach words from their context, gains nothing 
in clearness. 

Writers on political economy are prone to attempt to sub- 
ject the science to the limitations of scholastic formulas, 
wrought out by processes of abstract reasoning in which 
economic forces are regarded as accurately ascertained invari- 
able qualities, or quantities, whose variations may be definitely 
measured; but political science cannot be reduced to a code of 
abstract formulas ; nor will it always yield to the precision of 
mathematic forms of statement. It deals with a multitude of 
facts, and numerous and conflicting forces of varying intensity ; 
and attempts at absolute precision of statement within the 
compass of a sentence or a paragraph lead either to clumsy 
obscurity, or to the omission of troublesome qualifications which 
may not be packed within the limits of a symmetrical formula. 

It is as impracticable to declare, in precise terms, the laws of 
trade, or of the tenure of property, or to define methods of taxa- 
tion adapted to all ages and conditions of social progress, as it is 
to make one adjustment of the sails of a ship answer for a voy- 
age across the sea. There are principles that inhere in the na- 
ture of things which must ever remain the same ; but doctrines 
which deal not with fixed conditions alone, but with all the 
changing phases of a growing civilization, must be shaped and 



THE DISTEIBUTION OF WEALTH. 7 

fitted to new conditions as they arise. Political economy 'is not 
a stationary science ; it was not embalmed in the writings of 
Eicardo, Malthus, and Smith. What is once true is always 
true ; but that which is true of one condition of men, or of the 
relations of the people of one age, may be far from true of those 
of another. 

Many publications upon the subject of political economy are 
freighted with the anaemic thought, whose vitality has been de- 
stroyed by the malaria of a stagnant science ; and the most 
sickly localities are often to be found in the vicinity of ancient 
institutions of learning. 

When the Talmud was produced, religious literature and re- 
ligious science among the Jews had reached what political 
economists term the stationary state, and we have, therefore, in 
this remarkable religious miscellany, an illustration of a religion 
gone to seed, — that j)li^se of development in which normal 
thought is superseded by idle speculation and quaint conceits 
arrayed in the garb of consequential pretence. 

One of the curious whims that exhibits itself in that remark- 
able body of writings is the subjection of thought to the notion 
of numerical relation. In consequence, there is the book of 
Ones, the book of Twos, the book of Threes, and so on through 
a long series. When we read in the book of Ones that " The 
former Chasidim used to sit still one hour, then pray for one 
hour, then sit for another hour ;" and that " Eabbi Chanina could 
put on and off his shoes while standing on one leg only, though 
he was eighty years of age ;" or in the book of Sevens that " a dog 
in a strange place does not bark for seven years ;" or in the book 
of Tens that " Moses, being ten ells high, seized an axe ten ells 
long, and, springing up ten ells, struck Og on the ankle and killed 
him ;" we cannot avoid the thought, that possibly ideas came to 
be fashioned with a purpose of avoiding discords in this arti- 
ficial system of numerical harmonies, to which, doubtless, both 
tradition and logic were often compelled to yield precedence. 

Political economy has sometimes exhibited symptoms of the 
Talmudic tendency. At the risk of intruding upon what may 
have been intended as only a tete-d-tete between two collegiates 
in their chosen dialect, I quote from a recent number of the 
Journal of Economics the following : 



8 THE DISTEIBUTION OF WEALTH. 

" The first of these (two points) is the form of the curve of 
the price of wheat, which Jevons regards as asymptotal, and Mr. 
Wickstead as cutting both axes. Mr. Wickstead proposes to 
limit his curve to the prices of wheat considered as used for 
human food only. This limitation does not radically alter the 
problem, as the alternative uses at lower values only delay the 
approach of the curve to the axis, and do not prevent it reach- 
ing zero, if Mr. Wickstead' s views are correct." 

" There are other uncertainties in the data. Is the excessive 
supply supposed to be caused by an accidental large yield or 
acreage, or by the discovery of a new more prolific variety? 
Differences of this kind in the data would modify the form of 
the curve, but would not affect the main question, whether or 
not it is asymptotal. 

Here are two astute professors of science, or else young men 
who have not yet been long enough out to have wasted their 
college-born enthusiasm for asymptotes along the jolting high- 
way of practical affairs, who, having observed a certain analogy 
between the relation of a curved line representing the varying 
price of wheat and a line representing the product, and the 
definite mathematical relation of the asymptote to its axis, — an 
analogy which, if simple and easily comprehended, might serve 
the purpose of illustration, — imagine themselves to be discussing 
a great principle, possessing all the necessary qualifications of 
recondite novelty to render it worthy the title of a " doctrine" 
of political science. 

The science of political economy has become prohfic of learn- 
ing of this character. 

Asymptotes are the dumb-bells and Indian clubs of science, 
and should constitute a part of the furniture of every well- 
equipped intellectual gymnasium. But, very naturally perhaps, 
many of our worthy professors, when they go abroad as archi- 
tects of political science, insist on employing the implements 
with which they have become most familiar, rather than the 
common, though more efficient, tools of the practical artisan. 
The consequence is, that the noise they make is sometimes alto- 
gether out of proportion to the number of nails they drive. 
That which most attracts the listening crowd, in the field of 
constructive science, is not always the sound of effective in- 



THE DISTRIBUTION OF WEALTH. 9 

dustry, but often only the resounding din of asymptotalism ; it 
is the professor abroad with his dumb-bells — driving tacks. 

Science is simply the ascertained interpretation of facts. 
That interpretation may or may not be reduced to the form of 
an abstract generalization. But when it is so expressed, every 
fact must have a place in the theory ; since a theory which runs 
counter to any fact, however plausible or recondite may seem 
the formula in which it is clothed, must be unsound. 

Within the present century new economic forces have come 
into play, and old tendencies have gathered increased power. 
There are conditions which were useful in an earlier sta^re of 
social development that have performed their service and ex- 
hausted their utility, and now remain only as burdens which 
society has not yet been able to cast off. There are forces which 
are essential to the growth of society that need to be harnessed 
with judicious restraints. Forms of government, methods of 
administration of the highest utility in one age, may become an 
insufferable evil in the next. Eules of political economy fitted 
to one condition of society, adapted to one day and age, may be 
wholly unsuited to other times and conditions. 

Within the limits of the present century the producing power 
of the people, in every department of industry, has been greatly 
multiplied by new discoveries and inventions. According to 
Edward Atkinson, " the labor of one man, aided by improved 
machinery, will, in one year, produce five thousand six hundred 
and twenty-five bushels of wheat (in Dakota ?) ; the moving of 
four thousand five hundred bushels of wheat seventeen hundred 
miles represents the labor of one and a half men for one year ; 
the labor required for making this wheat into flour, and making 
barrels for the same, from the log, is equivalent to the labor of 
one man for one year ; add to this the labor of one man for six 
months for repairs of machinery, and one thousand barrels of 
flour delivered in JSTew York represent only the direct labor of 
four men for one year ; the conversion of one thousand barrels 
of flour into bread and its sale represent the work of only three 
persons working one year. Thus seven men serve bread to one 
thousand persons. One man in a cotton-mill spins and weaves 
cotton cloth for two hundred and fifty persons ; one in a woollen- 
mill, cloth for three hundred persons; one in a coal-mine, iron- 



10 THE DISTRIBUTION OF WEALTH. 

mine, or iron-furnace serves two hundred pounds of iron each 
to five hundred persons ; one in a men's boot and shoe factory 
makes two pairs a year of boots and shoes for eight hundred 
persons j one in a women's boot and shoe factory makes three 
pairs a year for one thousand persons ; one in a shirt factory 
sews two thousand four hundred excellent shirts, or more of 
lower quality, or four a year for six hundred to eight hundred 
persons." * 

In the manufacture of agricultural implements one man does 
the work of two men twenty-five years ago. In the principal 
labor involved in the manufacture of small-arms one man now 
does what it required forty-five to fifty to do by hand. In the 
manufacture of women's boots and shoes one person does the 
work which it would take five to do by hand. In other depart- 
ments of the same industry one person has taken the place of 
two. With Goodyear' 8 sewing-machine for turned shoes one 
man does the work of eight. In nailing on heels one man does 
the work of five ; in sand-papering the bottoms one man does 
the work of four. 

In the construction of carriages one man has taken the place 
of three. In 1879 a large broom-manufacturing concern with 
seventeen skilled men manufactured five hundred dozen brooms 
per week. In 1885, with but nine men and improved machinery, 
the same firm turned out twelve hundred dozen brooms per week. 

In the manufacture of carpet one man now does the work 
which it required from ten to twenty persons to do in 1860. 

In the manufacture of hats of a medium grade one man does 
the work of three. A hand-loom weaver used to weave from 
sixty to eighty picks per minute in weaving a cloth of good 
quality with twenty threads of twist to each one-quarter square 
inch. A power-loom now weaves one hundred and eighty picks 
per minute of the same kind of cloth, and one weaver minds all 
the way from two to ten looms, according to the grade of the 
goods. 

In the manufacture of flour one man has taken the place of 
four ; and in the manufacture of furniture, of two or three work- 
men formerly required to do the same work. 

* Atkinson on Distribution of Products. 



THE DISTRIBUTION OF WEALTH. 11 

In nearly all departments of industry, by means of macliinery 
and combination under the direction and control of capital, the 
power of labor has been wonderfully augmented. Naturally, 
we would expect a corresponding growth of general prosperity 
and of individual wealth. And of wealth there is indeed an 
abundance. But the conditions which have made rapid accu- 
mulations of wealth practicable are unfavorable to its equitable 
distribution. The accumulated product of the industry and 
skill of the people of a nation is owned and controlled by a 
comparatively small number of persons, many of whom have 
made to society no adequate return for the possessions which 
they have acquired, but which they did not create. The laws 
of inheritance, of finance, the laws of trade and of land tenure 
are such as to lead to the grossest inequalities of property and 
of opportunity for its acquisition ; and, although there has been 
the most wonderful development of the power of labor to pro- 
duce, there has been no corresponding increase in the wealth of 
the great majority of the people. The extremes of poverty and 
of affluence have grown wider and wider apart, and suffering and 
want have become more common. Each individual has become 
less and less an independent producer. All have become in- 
volved in a tangled net-work of commercial and financial forces, 
and, as they move on together in the hurrying, jostling crowd, 
some are pushed forward, some are thrust aside, and many are 
trampled under foot. 

Mr. Henry George, in " Protection or Free Trade," says, " Five 
centuries ago the wealth-producing power of England, man for 
man, was small indeed compared with what it is now. JSTot merely 
were all the great inventions and discoveries, which, since the 
introduction of steam, have revolutionized mechanical industry, 
then undreamed of, but even agriculture was far ruder and less 
productive. Artificial grasses had not been discovered. The 
potato, the turnip, the carrot, the beet, and many other plants 
and vegetables which the farmer now finds most prolific, had not 
been introduced. The advantages which ensue from rotation 
of crops were unknown. Agricultural implements consisted of 
the spade, the sickle, the flail, the rude plough, and the harrow. 
Cattle had not been bred to more than half the size they aver- 
age now, and sheep did not yield half the fleece. Eoads, where 



12 THE DISTRIBUTION OF WEALTH. 

there were roads, were extremely bad; wheel vehicles were 
scarce and rude ; and places a hundred miles from each other 
were, in difficulties of transportatioUj practically as far apart as 
London and Hong-Kong, San Francisco and JSTew York are now. 
Yet patient students of those times, such men as Professor 
Thorold Eogers, who has devoted himself to the history of 
prices, and has deciphered the records of colleges, of manors, 
and public offices, tell us that the condition of the English 
laborer was not only relatively but absolutely better in those 
rude times than it is in England to-day, after five centuries of 
advance in the productive arts. They tell us that the working- 
man did not work so hard as he does now, and lived better; 
that he was exempt from the harassing dread of being forced 
by loss of employment to want and beggary, or of leaving 
a family that must apply to charity to avoid starvation. 
Pauperism, as it prevails in rich England of the nineteenth 
century, was, in the far poorer England of the fourteenth cen- 
tury, absolutely unknown. Medicine was empirical and super- 
stitious. Sanitary regulations and precautions were all but un- 
known. There was frequently plague and occasionally famine ; 
for owing to the difficulties of transportation, the scarcity of 
one district could not be relieved by the plenty of another. But 
men did not — as they do now — starve in the midst of abundance ; 
and, what is perhaps the most significant of all, women and 
children were not worked as they are to-day; but the eight- 
hour system, which even the working-classes of the United 
States, with all the profusion of labor-saving machinery and 
appliances, have not yet attained, was then the common system." 

John Stuart Mill, in his work on political economy, says, 
"Hitherto it is questionable if all mechanical inventions yet 
made have lightened the day's burden of any human being. 
They have enabled a greater population to live the same life of 
drudgery and imprisonment, and an increased number of manu- 
facturers and others to make fortunes. They have increased the 
comforts of the middle classes ; but they have not yet begun to 
effect those great changes in human destiny which it is in their 
nature and their futurity to accomplish." 

Professor Thorold Eogers, in his " Six Centuries of Work and 
Wages," speaking of the thirteenth and fourteenth centuries in 



THE DISTEIBUTION OF WEALTH. 13 

England, says, " All the necessaries of life, in ordinary years, 
were abundant and cheap ; and even in dearer years the margin 
of wages or profits over the bare wants of life was consider- 
able enough to fill up the void. Meat was plentiful, poultry 
everywhere, eggs cheapest of all. The poorest and meanest 
man had no absolute and insurmountable impediment put upon 
his career if he would seize his opportunity and make use of 
it. . . . 

" I am well aware that such medical skill is now at the ser- 
vice of the poor as princes and prelates desired, but were en- 
tirely without, in the Middle Ages. ... I know that four grains 
of wheat and barley or any other grain are produced by modern 
tillage, where one was with difficulty raised before ; that the ox 
has been selected and bred and fed from four hundred pounds or 
less to twelve hundred or more ; that sheep which once yielded 
a pound of wool precariously, now produce from seven to nine 
pounds ; that the powerful cart-horse has taken the place of the 
wretched and stunted pony of the old English breed, and that 
other animals which are destined for the service of man have 
been selected till there seems nothing to desire in their shape, 
size, or utility. I see, in all directions, that human toil has been 
supplemented and sometimes superseded by mechanical agencies 
which genius has invented and patience has elaborated. . . . 
But I am convinced that modern civilization will be judged, 
not by what it has done, but by what it has left undone ; not by 
what it has remedied, but by what it has failed to heal, or at 
least to have relieved ; not by its successes, but by its short- 
comings. It may be that the progress of some has been more 
than counterbalanced by the distress and sorrows of many ; that 
the opulence and strength of modern times mock the poverty 
and misery which are bound up with and surround them ; and 
that there is an uneasy and increasing consciousness that the 
other side hates and threatens. 

" It may be well the case, and there is every reason to fear it 
is the case, that there is collected a population in our great 
towns which equals in amount the whole of those who lived in 
England and Wales six centuries ago, but whose condition is 
more destitute, whose homes are more squalid, whose incomes 
are more uncertain, whose prospects are more hopeless than 



,/ 



14 THE DISTRIBUTION OF WEALTH. 

those of the poorest serfs of the Middle Ages and the meanest 
drudges of the mediaeval cities. The arm of the law is strong 
enough to keep them under, and society has no reason to fear 
their despair ; but I refuse to accept the superficial answer that 
a man is an admirer of the good old times, because he insists 
that the wants of civilization should be examined along with 
and not apart from its failures." 

Speaking of the earlier part of the nineteenth century, he 
says, " That the patents of Arkwright and Peel secured enor- 
mous fortunes to those inventors, or purchasers of inventions, 
we all know J that they ultimately cheapened production is 
equally clear ; that they gave England well-nigh a monopoly in 
the supply of textile fabrics is as manifest; but it does not 
strictly follow that the English workman was better paid. The 
hand-loom weaver was undoubtedly impoverished ; but I do not 
find that the machine weaver bettered his position. His wages 
remained low ; his means were ever straitened ; and the misery 
of the manufacturing districts was greater even than that of 
the agricultural." 

Speaking of the agricultural classes, he says, " The condition 
of the agricultural laborer has been different from that of the 
artisan. Scattered and incapable of combined action with his 
fellows, bowed down by centuries of oppression, hard usage, and 
hard words ; with, as he believes, every social force against him, 
the landlord in league with the farmer, and the clergyman in 
league with both, the latter constantly preaching resignation, 
and the two former constantly enforcing it, he has lived through 
evil times." 

Speaking of the agricultural laborers in England, Mr. Adam 
Badeau, in his " Aristocracy in England," says, " In 1880 the 
average wages of the agricultural laborer, the man who worked 
the two thousand million acres of land and produced the three 
hundred and thirty million dollars of revenue, was fourteen 
English shillings a week, or about fifty cents a day ; out of this 
he had to pay his rent to the earl or duke, which was two Eng- 
lish shillings, or fifty cents a week. Bread was three cents a 
pound, meat eighteen cents, and butter one shilling and eight 
pence, — about forty cents. 

"I heard viscounts and baronets, and bishops and earls, 



THE DISTRIBUTION OF WEALTH. 15 

lamentiog the misery and depravity, the poverty and low wages 
of the wretches who lived on their estates. I heard them admit 
that in their part of the country a shilling (twenty-four cents) 
a day was often the wages of a strong, healthy man, who had a 
wife and six or seven children to suj)port, out of which, I heard 
them say, at least a shilling a week was deducted for rent. I 
heard that whole families occupied a single bedroom. I heard 
of the ignorance and stolidity, often the brutality, of the English 
peasants, of whom there are several millions." 

This is England, that for centuries has stood first among the 
nations in moral, social, and religious culture, and has led the 
world in the development of the practical sciences, in industrial 
growth, and the accumulation of wealth ; England, whose peo- 
ple are practically as free as the people of the United States, 
whose policies, more than those of any other nation, have been 
shaped in harmony with the orthodox theories of political 
science, and where the doctrine of laisser faire, or free and un- 
restricted play of economic forces, so devoutly cherished by 
writers on political economy, has held the most complete sway. 
The people of the United States are travelling along the same 
highway, and are rapidly nearing the same end. American 
works on political science, which have been in no small measure 
our guides in legislative policy, have been given us by college 
professors whose characteristic function it is to perpetuate an- 
cient languages and ancient doctrines. Orthodox by profession, 
conservative by habit, they stand like painted sign-boards, 
pointing down the old travelled road. It is a needed service 
well performed. But, knowing, as we now do, where that old 
road leads, it is time to stop and consider whether we will to go 
that way, or whether we shall alter our destination and change 
our course along some new highway, where the sign-boards have 
not yet been put up. 

The statistics of our national wealth, our commerce, our man- 
ufactures, our agriculture, are constantly paraded before us to 
excite our wonder and challenge our admiration. It may gratify 
our pride to know that in the race for wealth and power we are 
outrunning the nations of Europe ; but the question that con- 
cerns most the social philosopher, or intelligent patriot, is what 
progress the people are making towards a life unworn by ex- 



16 THE DISTRIBUTION OF WEALTH. 

hausting toil, unfettei-ed by needless anxieties, — that condition 
which shall extend and widen the opj)ortunities for social culture 
and moral and intellectual growth. 

Political economy has been most frequently discussed in its 
relation to the growth of the industries and the increase of 
national wealth. The classes by whose labor wealth is created 
have been considered along with lands and chattels as important 
factors in the production of wealth ; but their own well-being 
has been too often regarded only in its relations to production, 
and without independent consideration of the moral and social 
welfare of the common people. But much attention has been 
given by recent writers to the study of economic questions, with 
the distinct purpose of ascertaining what, if anything, may be 
done to ameliorate the condition of the laboring classes. The 
growth of wealth in the hands of a relatively small number of 
persons has been so unprecedented, so out of all proportion to 
the services which these persons may be supposed to have ren- 
dered, the power which they have thus acquired over the for- 
tunes of others has become so threatening, as to weaken faith 
in some of the dogmas which, for nearly a century, have been 
accepted as ultimate truths of political science. There is a feel- 
ing of alarm, a sense of something wrong in the adjustment of 
social forces. 

Mr. Carnegie, in the North American Review, tells us that 
"the contrast between the palace of the millionaire and the 
cottage of the laborer, with us to-day, measures the change 
which has come with civilization." How much civilization has 
done for the millionaire, and how little for the laborer ! 

Mr. Carnegie devotes several pages of the Review to the 
consideration of the question as to what millionaires should do 
with their excesses of wealth. He decides that it is not to be 
bestowed in alms ; since, out of every thousand dollars spent in 
so-called charity, nine hundred and fifty are unwisely spent; 
but that it should be devoted to the endowment of colleges or 
building of churches, or be bestowed on cities in the foi'm of 
public parks and libraries ; not forgetting to suggest that a com- 
munity cannot " pay a more graceful tribute to the citizen who 
presents it than to give his name to the gift," nor failing to re- 
mind the beneficently-inclined millionaire of the " admiration of 



THE DISTRIBUTION OF WEALTH. 17 

his fellow-men," which inures to the bestower of princely gifts. 
It is some satisfaction to learn that millionaires who regard as- 
sistance rendered to the weak and unfortunate, without recom- 
pense other than the fleeting gratitude of suffering women, or 
the cheap generosity of impoverished manhood, as wasted 
charity, — wasted because, poured into a sea of misery and want, 
it does not, like a palace of stone, or a public park, endure to 
proclaim to the world the generosity of the giver, — may, in con- 
sideration of a substantial guarantee of posthumous fame, be 
induced to devote to a worthy purpose a part of their surplus 
wealth. If Mr. Carnegie has not overestimated the vanity of 
those to whom his appeal is addressed, within the next half- 
century the names of dead millionaires may be as thoroughly 
advertised as medical panaceas are to-day, and their virtues as 
loudly and as truthfully proclaimed. 

Mr. Carnegie does not mistake the tendency of popular 
thought, when he says, " There will be nothing to surprise the 
student of socialogical development, if society should soon ap- 
prove the text which has caused so much anxiety," " It is easier 
for a camel to go through the eye of a needle, than for a rich man 
to enter into the Kingdom of God." Not that society is, at 
present, disposed to unreasonable extremes, or to rest its claims 
upon the authority of scriptural texts ; but the people are con- 
scious that there is somewhere a grave wrong; they are in 
doubt as to the cause and uncertain as to the remedy. They 
are studying the symptoms in the old family almanac, and are 
confused by the number of sure cures ; but they are going to 
try something. 

The tariff, the railroads, the merchants, taxation, are each 
assailed in turn as the cause of the admitted evil. The farmer, 
who has been, perhaps, the greatest sufferer, organized first 
against the railroads. Freights have fallen until they are now 
less than half what they were in 1869, and a ton of freight is 
moved a mile for less than a cent ; but the farmer has found no 
relief. Seeing in the retail merchant the enemy of his pros- 
perity, he has organized co-operative stores and farmers' stores, 
where he may buy goods at an advance of ten per cent, above 
cost. This remedy, too, has proved a failure. He is now urged 
to an attack on the protective tariff, and, other remedies failing, 

2 



18 THE DISTEIBUTION OF WEALTH. 

he may be persuaded to try the experiment. The silver man 
and the paper-money man each has his special theory, which he 
deems adequate to explain the cause of existing evils. 

The workingmen in manufacturing and mining industries, 
and those engaged in railway service, have sought relief in 
strikes, and no doubt have thereby maintained wages in these 
industries at a point above the rates to which wages would 
have fallen, except for the organized protest of the wage 
earners. Such remedies are, however, temporary in effect and 
unsatisfactory in results. 

The aggregation of wealth is not peculiar to any one country, 
though, for obvious reasons, it bas proceeded more rapidly in 
the United States than in any of the older nations of Europe. 
It is the effect, not of local or temporary causes, but the essen- 
tial product of economic forces everywhere operative, and 
producing the same results, except as counteracted by hindering 
forces. It therefore becomes necessary to recur to the exami- 
nation of first principles, the underlying laws which control the 
creation and distribution of wealth, before we shall be prepared 
to inquire as to the remedy, if there be any remedy, that would 
be effective and practicable. 

When Adam Smith wrote the "Wealth of Nations," the 
important inquiry was how to create wealth. That question 
has been fully answered by the invention of labor-saving ma- 
chinery, the steamship, the railway, and the telegraph. The 
inquiry now is, how may wealth be distributed, so that he 
who creates it may enjoy it ? how shall the labor of the nation 
be distributed so that equal opportunities may be open alike to 
all? Mill, in his "Political Economy," says, " The observations 
in the preceding chapter had for their principal object to 
deprecate a false ideal of human society. Their applicability to 
the practical purposes of the present times consists in moder- 
ating the inordinate importance attached to the mere increase of 
production, and fixing attention on improved distribution and 
large remuneration of labor as the two desiderata. Whethel* 
the aggregate produce increases absolutely or not is a thing in 
which, after a certain amount has been obtained, neither the 
legislator nor the philanthropist need feel any strong interest ; 
but that it should increase relatively to the number of those 



THE DISTEIBUTION OF WEALTH. 19 

who share it is of the utmost possible importance ; and this 
(whether the wealth of mankind be stationary or increasing at 
the most rapid rate ever known in an old country) must depend 
upon the opinions and habits of the most numerous class, the 
class of manual laborers." 

Edward Atkinson says, "The production of what consti- 
tutes wealth or welfare is no longer at issue ; modern science 
and modern instrumentalities of production are adequate to 
produce what would suffice for a good subsistence for every 
man, woman, and child in any and all countries. The whole 
question at issue is the distribution of this subsistence, after it 
has been produced." 

Tine inquiry pursued in the following pages will be confined 
chiefly to the question of the distribution of wealth, and the 
causes by which distribution is determined. It is impracticable, 
however, to consider distribution wholy apart from production. 
They are essentially involved together, and must be carried on, 
each in immediate relation to the other. The nature, extent, 
and effect of the aggregation of wealth, the limitations of 
wealth, commerce, protection, taxation, and interest on credits 
are necessarily embraced within the scope of the inquiry upon 
which we enter. 

The subject of political economy is one which concerns the 
welfare of every citizen, but which, nevertheless, possesses little 
attraction, except for those who have made it the subject of 
special study, and most readers are disposed to avoid a discus- 
sion of abstract theories which impose the necessity of a sus- 
tained effort to comprehend and apply them. I have, therefore, 
in the following pages, sometimes departed from the usual 
methods pursued in the discussion of questions of economic 
science, and endeavored, by means of somewhat elaborate and 
sometimes commonplace illustrations, to bring the subject within 
the more ready grasp of those who are unfamiliar with the gen- 
eral principles of political economy. For like reason, the dis- 
cussion has not been conducted throughout in that subdued 
monotone regarded as best befitting a calm and impartial logic. 
ISTevertheless, care has been observed to avoid inaccuracy of 
statement, or argument which will not bear the test of analysis. 
I believe that the working-people in the United States and 



20 THE DISTEIBUTION OF WEALTH. 

throughout Europe are suffering grave wrongs, for which there 
may be found an effective and practicable remedy. I believe 
that prevailing doctrines of economic science, although ema- 
nating from eminent writers who are both earnest and sincere, 
have been fashioned in harmony with the interests of the con- 
trolling classes. I do not believe that it is one of the essential 
requirements of civilization that the enduring products of the 
toil of millions of people, which represent the savings of labor 
from year to year, should be gathered and appropriated by a few. 
I do not believe that any man ever earned or was justly entitled 
to a fortune of millions. I do not believe in any law of inheri- 
tance whereby wealth without limit may be transmitted from 
generation to generation in uninterrupted succession. I believe 
in a policy which will tend to level down all those gross ine- 
qualities that spring from the accident of birth or chance oppor- 
tunity. I believe in a free and fair competition as essential to 
a healthy social and industrial life, and in guarding the rights 
of every man to the acquisitions of industry, enterprise, and 
skill. But the scheme of social order, to which the industrial 
life of every individual must conform, is in part conventional 
and artificial, and is essentially imperfect; and he who takes 
advantage of its imperfections to gather to himself that which 
in equity belongs to others, should be held in check by limita- 
tions which leave room and scope enough for all the accumula- 
tions which may be fairly set down to the credit of industry, 
skill, or exceptional enterprise, but interpose an impassable bar- 
rier to the increase of wealth beyond that point where it repre- 
sents only unjust gains gathered from the weaker members of a 
great industrial copartnership. 

I am aware that the more wealthy members of society, sus- 
tained by the orthodox doctrines of political economy, are gen- 
erally prompt to attribute the great existing inequalities of 
wealth, and the impoverished and dependent condition of the 
industrial classes, to the imperfections of human nature; but 
I am not aware that there ever has at any time been made mani- 
fest a disposition on their part to relieve the weaker members 
of society from the weight of unjust burdens. They hold on, 
guarding with tenacious vigilance all the advantages which 
they have secured. Never yet has there been made an earnest, 



THE DISTRIBUTION OF WEALTH. 21 

persistent effort in behalf of the working-people, to place them 
on the vantage-ground of equal opportunity. Their advance is 
held in check by the operation of economic laws developed out 
of conditions which, except in the United States, they have been 
without the power to change. When they have been brought 
to understand the origin of the evils that weigh them down 
and obstruct their advance, it must not be expected that they 
will continue to endure burdens which they have the power to 
cast off. I do not believe that the working-people of the United 
States will long continue to permit the present aggregation of 
wealth to go on. They must perceive that their opportunities 
are growing less and less, and that they are rapidly nearing that 
condition of absolute dependence which environs the masses of 
working-people of Europe to-day. 

Among recent contributions to the science of political economy 
in its modern phases, those of Edward Atkinson are deserving 
of special attention. Mr. Atkinson is a patient investigator of 
facts, whose conclusions are generally well supported, if not 
always satisfactorily demonstrated. But the final deduction 
which he draws, and which it appears to be his leading purpose 
to sustain, — viz., that the present distribution of the products of 
labor is, in the main, equitable, and that improvement in the 
condition of the laboring classes must await the slow process of 
education and social evolution, and may not be aided by legis- 
lative interference, — appears to me to be a leap beyond the legit' 
imate conclusion of his argument. 

Mr. Andrew Carnegie is the author of a swaggering book 
entitled "Triumphant Democracy," an exulting paean to the 
progress of the young republic, in which, after properly humil- 
iating the effete monarchies of Europe by a calcium-light display 
of our territorial bigness, he exhibits in one dazzling panorama 
a complete collection of our worldly possessions. Though the 
style is somewhat suggestive of the show-bills of the " biggest 
show on earth," the book is both instructive and entertaining. 
Mr. Carnegie is a domesticated Scotchman, who has chanced to 
draw a lucky number in the lottery of life, and like the country- 
man who, by a lucky turn of the wheel of fortune at an ag.ri- 
cultural fair, has drawn the capital prize, he enjoys the show, 
and feels a swelling pride as he views the big pumpkins and fat 



22 THE DISTEIBUTION OF WEALTH. 

Berkshires which, however, fail to arouse the enthusiasm of 
the unfortunate wight who risked his money on the wrong 
number. 

Mr. Carnegie organizes a street-parade. Says he, " Were the 
live stock upon Uncle Sam's estate ranged five abreast, each 
animal estimated to occup}^ a space five feet long, and marched 
around the world, the head and tail of the procession would 
overlap. This was the host of 1880 ; that of 1885 would be ever 
so much the greater ; and still it grows day by day, and the end 
of its growth no man can foretell." 

Mr. Carnegie's book is» a complete and reliable exposition of 
the wealth and resources of the United States, and only serves 
to increase our wonder that, in a country whose resources ap- 
pear to be unlimited, where the arts of production have reached 
their highest development, and where wealth displays its mag- 
nificence on every hand, penury and want should abide; that 
even here, above the joyous laughter of peace and plenty, above 
the hum of factories and the roar of furnaces, should be heard 
the discordant mutterings of discontent. 

The j)henomenal success of some who begin life as poor 
boys, and afterwards attain to the rank of millionaires, which 
is often cited as evidence of the possibilities of exceptional in- 
dustry and worth, proves not that all may become millionaires, 
nor that the reasonable rewards of industry and skill are sure, 
but only this, that the hard-earned dollars of a thousand men, 
even in America, may become the booty of the daring brigand. 
Mr. Carnegie, like others who have written panegyrics upon 
the phenomenal growth of our national wealth, does not seem to 
realize that the larger the capital prizes are, which are drawn 
in the lottery of fortune, the greater the number of the blanks ; 
and that those who have drawn blanks are not in the mood to 
join him in a wild and reckless dance of joy, inspired by a con- 
templation of the wealth whose magnificence is but a measure 
of the booty gathered by capital and cunning in a war against 
labor, — an honorable war for the most part, maybe, conducted 
according to the time-honored laws of trade, but a war of con- 
quest and aggrandizement nevertheless, that has left sorrow and 
sufi'ering and blasted hopes in its trail. The exultant shouts of 
the victors on their triumphal march may resound loud and far ; 



THE DISTRIBUTION OF WEALTH. 23 

but the tumult and clang of all this boastful rejoicing are com- 
mingled with the moans of the vanquished. 

The writings of Mr. Henry George upon economic subjects, 
"Progress and Poverty," " Social Problems," etc., are all worthy 
of attention. Mr. G-eorge's writings are often instructive and 
always entertaining ; his argument is generally well sustained, 
and, although it may not convince, must command the thought- 
ful consideration of the candid reader. Logical in method and 
loyal to his own convictions, he offends neither the taste nor the 
intelligence of his readers by a resort to the shallow devices of 
the literary charlatan. His works possess value, not only on ac- 
count of their literary merit, but also because of their vivid 
portrayal of existing evils. 

I cannot, however, give assent to the leading doctrine, the 
conclusion about which Mr. George has grouped all his facts and 
arguments. He traces the unequal distribution of wealth, and 
the extremes of poverty developed under existing conditions, to 
monopoly in the ownership of land, and proposes as a remedy 
the abolition of private ownership, or measures which are 
equivalent thereto. He finds no fault with usury, nor with ex- 
isting laws of finance, but, consistent with his idea of a single 
tax on land, he favors the abolition of all customs duties, and 
the removal of all restrictions on trade. 

To one who stands beneath the glare of an electric light, those 
objects within the illumined space are rendered unusually vivid 
and distinct; while the darkness beyond looks all the more 
black and dense; and the figures in the shadows take on the 
shapes that fancy gives them. Mr. George possesses a keen 
perception and a glowing imagination; and his logic is some- 
times dazzled by the glare of his brilliant rhetoric. He sees 
clearly, and portrays wuth fidelity, those objects that fall within 
the illumined space about him ; but the dim, half-lighted gloam- 
ing that fringes the outer bounds of his vision he peoples with 
pessimistic spectres, weird and gaunt, to trouble and affright us ; 
and the reader who follows him to the end may be somewhat in 
doubt whether he be a veritable seer, or only a man who has 
been startled by a ghost. But, whether seer or alarmist, or 
somewhat of both, Mr. George is an accomplished writer with 
the power to command attention, and intensely in earnest, and 



24 THE DISTRIBUTION OF WEALTH. 

no writer has done more to push fo the front the questions con- 
cerning capital and labor that are now claiming universal 
attention. 

In the year 1849, Edward Kellogg published a book entitled 
"Labor and Capital," which has since been republished. It 
attracted little attention at the time of its first appearance, there 
being then no awakened interest on the subjects discussed. 
Mr. Kellogg exhibits the rapid growth of aggregated wealth 
up to the time of his writing, and the relative increase of 
poverty among the masses of the people. The remedy proposed 
by him is a practical abolition of interest ; and he elaborates a 
scheme by which he claims that interest may be reduced to the 
rate of one and one-tenth per cent, per annum. The book is 
the product of the patient study and observation of a man of 
wide business experience, is clearly written, and deserves to be 
read. It was republished in 1874. 

One of the best discussions of the tariff, from the stand-point 
of the protectionist, will be found in a work by Mr. Henry M. 
Hoyt, published in 1886, entitled "Protection vs. Free Trade." 
The opposing view is strongly supported in the work of Henry 
G-eorge, entitled " Protection or Free Trade," published also in 
1886. 

In all standard works on the subject of political economy the 
doctrines of protection and free trade are discussed, the argu-" 
ment being generally that of the English free-trade school with 
which the reading public have long been familiar. Henry C. 
Carey, who is a protectionist, treats the subject historically, 
and supports his view with an extended array of facts. The 
most complete historical treatise is perhaps the special work of 
E. W. Thompson, published in 1888. " The History of the 
Tariff," by F. W. Taussig, is well written and reliable. Horace 
G-reeley, in his work on " Political Economy," contributes valu- 
able thought to the discussion. 

As a general treatise on the subject of political economy, 
" Elements of Political Economy," by Francis Wayland, recast 
by Chapin, although designed for a school-book, possesses much 
merit, and is as comprehensive in scope as many of the more 
pretentious works. 

" Principles of Political Economy," by John Stuart Mill, pub- 



THE DISTRIBUTION OF WEALTH. 25 

lished in 1848, has perhaps received a wider acceptance than 
any other work on that subject except that of Adam Smith's 
"Wealth of Nations." Mill's style is clear and attractive, and 
his views are comprehensive. As a general exposition of eco- 
nomic science his work is not excelled by that of any modern 
author. 



CHAPTEE 11. 

CHANGED CONDITIONS. 

In the United States, within the last fifty years, there has 
been a development of industry and a growth of wealth wholly 
unprecedented in the world's history. We are accustomed to 
regard this inordinate increase of wealth as the measure of our 
progress in the line of an improved civilization, and to speak of 
the great gain as a blessing enjoyed in common by the whole 
people. 

That there have been secured to the masses of the people 
opportunities for increased enjoyment as common privileges of 
all, and that the average amount of toil required for the main- 
tenance of the family has diminished, there can be no question. 
But, with all the multiplication of wealth, and increased power 
of labor through the employment of ingenious machinery and 
the use of electricity and steam, there have come also changed 
conditions and new relations. The entire country has been 
interlaced with lines of railway ; distance has been annihilated ; 
New York and San Francisco, Chicago and New Orleans speak 
together as neighbors standing face to face ; the products of 
one section are carried a thousand miles as readily as formerly 
they might have been hauled the distance of a day's drive, and 
are distributed throughout the nation in universal competition 
with the products of every other section. Dakota raises wheat 
for Massachusetts; Massachusetts makes shoes for California. 
Flour from the mills of Wisconsin competes with the flour of 
the mills of Pennsylvania, ground from wheat grown within a 
stone's throw of the latter, in the little stores in the village near 
by. The clothing we wear is manufactured five hundred or a 



26 THE DISTRIBUTION OF WEALTH. 

thousand miles away; the wagons and ploughs, reapers and 
mowers of the farmers on the prairies of Kansas and Nebraska 
are built in the workshops of Ohio. On the same day, in any 
little village, may be found commercial travellers from places 
five hundred miles apart, competing with each other in the 
sale of the same articles of manufacture. The mechanic of 
New England finds his customers in Iowa and Illinois, and 
the farmer of Illinois finds a market for his grain among the 
hills of Yermont. 

The independence of communities has been destroyed, and 
every man has become but a part, one of sixty million factors, 
in a universal system of production and exchange. His com- 
petitors are no longer his neighbors; they are men in New 
York, Massachusetts, Ohio, and Illinois. The power of indi- 
viduals is no longer circumscribed within the limits of small 
localities. The people of a mighty nation have been woven 
together in a web of interdependent relations, that may be held 
in the grasp of a single hand, and converted into a tossing 
blanket by the Samsons of commerce. 

Increased opportunities for trade have opened the way to 
unlimited acquisitions of wealth, and the fruits of a nation's toil 
are gathered by the skilful and the unscrupulous alike, and 
piled in heaps of imposing grandeur beyond the reach of a 
struggling crowd of dependent poor. 

The Napoleons of commerce lay tribute at will on a nation's 
trade, and augment their stores of wealth with a speed that 
increases in accelerated ratio as their fortunes grow. 

In the place where once sat the village shoemaker now sits 
the cobbler, sewing ripped seams and patching holes in old 
shoes. In the place of a dozen wagon-makers is a man putting 
new spokes in old wheels, tightening tires, or renewing worn-out 
axles. 

The blacksmith has become a shoer of horses or a sharpener 
of ploughs. The tailor is almost extinct. He is still found in 
cities, from whence he goes forth at intervals, with his samples 
and his tape, to take the dimensions and estimate the superficial 
area of a few patrons, whose tastes are beyond the range of the 
ready-made clothing store, whose articles of apparel are cut to 
fit the composite man of the period. The chair-maker and the 



THE DISTRIBUTION OF WEALTH. 27 

weaver are but faded memories; and the cabinet-maker has 
given way to the undertaker, who sells ready-made coffins, and 
rides in state on funeral days. The millwright was driven out 
by the roller process ; and the ranks of the house-painter have 
been decimated in a disastrous war with mixed paints. The 
mason and carpenter are still on dry ground above the flood of 
progress that has swept away their brother artisans, though 
many of their possessions also have been carried away on the 
swelling tide. The horse-rake, the two-horse cultivator, the 
mower, twine-binder, and steam-thresher have taken the place 
of men; and the farmer buys his fence at the hardware store, in 
a roll of jagged wire. 

Manufacturing industries have abandoned the country village, 
and gathered the people under the smoke of mighty cities. 
The city has grown and the village decayed. In the place of 
a host of artisans, who once clustered in every hamlet, breaking 
the dull uniformity of village life with a variety of employment 
and a diversity of experience, we have duplicates of the village 
merchant, who for twenty j)er cent, stands guard over a stock 
of foreign wares which he vends for cash or exchanges for 
butter and eggs ; while the city has grown monotonous in its 
confusion of over-abundant variety that satiates and cloys the 
senses like a museum of curiosities gathered for show. 

This is truly an era of material ideas, aims, and ambitions. 
Every man has become a factor in an immense money-making 
scheme, — a wheel in the great industrial machine. The life of 
each has become a part of an universal routine. He moves along 
well-defined paths marked out for him by the shaping hand of 
a material destiny, reading as he goes the familiar admonition, 
" Keep off the grass." 

In the industrial world everything is now done by machin- 
ery. Each worker performs an assigned part; and his labor 
is of value only in unison with that of many others. His work 
is often one continued round of repetition requiring no thought 
and little skill. He learns no trade that can be carried on inde- 
pendent of costly machinery, which must form a part of a man- 
ufacturing establishment requiring large capital to own or to 
operate. He cannot work without permission ; he must first be 
employed. He is one of a brigade, all moving together under 



28 THE DISTRIBUTION OF WEALTH. 

the eommand of a single head. He works for stipulated wages, 
and has no control over the product of his labor. 

For the opportunity to work he may be dependent on the will 
of a single man, who adds to or cuts from his working-force of 
men, according to the pointings of the index on the register of 
his own interests, as an engineer regulates the force of steam 
by the markings of the steam-gauge of his engine. 

If the laborer lose his place, he may be compelled to change 
his residence, and to seek employment in a distant locality, with- 
out the certainty of securing it, except after such delay and 
expense as he is unable to afford. 

In the place of the independent artisan in his own shop, the 
proprietor of his own labor, we have the dependent factory- 
hand or iron- worker, a single part of a great and complex ma- 
chine whose place may be supplied in an hour, should he drop out. 

Says Mr. Andrew Carnegie, " We assemble thousands of oper- 
ators in the factory, in the mine, and in the counting-house, of 
whom the employer can know little or nothing, and to whom 
the employer is little better than a myth. All intercourse be- 
tween them is at an end. Under the law of competition the 
employer of thousands is forced into the strictest economies, 
among which the rate paid to labor figures prominently ; and 
often there is friction between the employer and employe, be- 
tween capital and labor, between the rich and the poor. Human 
society loses ' homogeneity.' " 

By the aid of machinery, the productive power of labor, in 
many departments of industry, has been multiplied from twenty- 
to a hundredfold ; and it would be quite within bounds to say 
that, in this country, the total power of labor has been increased 
tenfold. In the production of food the increase is not so great ; 
but it is two or three times as great as it was fifty years ago. 
One-half the labor power of the whole country is sufficient to 
produce all that the people consume, although the present con- 
sumption of the products of labor must be more than double 
what it was fifty years ago. 

Flouring-mills run to their full capacity for three months could 
supply the flour for a year's consumption; our cotton-mills, 
woollen-mills, and iron-mills, in six months, could supply a year's 
demand for their products. 



THE DISTRIBUTION OF WEALTH. 29 

In every town or city there may always be found idle men 
and others who, though not idle, are ineffectively employed; 
and there is always a man ready for every vacant place. A 
single insertion in a metropolitan newspaper of a two- line ad- 
vertisement for a coachman or a clerk wanted is often sufficient 
to secure the response of a hundred needy applicants. 

What shall be done with all this labor ? How shall be secured 
equal opportunities to each man in this pushing, surging crowd 
of workers, where each, per force of necessity, must rudely 
jostle his neighbor to save himself from being trampled upon ? 

If the labor that is performed, even at the prices that are paid, i 
could be equitably distributed among all, so that each might j 
have like command of the products of industry, there would be | 
no difficulty arising out of the excess of labor. But what is to 
prevent A from working twelve months, while B finds employ- 
ment for but six months of the year ? If B receives only the 
wages of six months, he can consume only the products of six 
months' labor. When a great number of people are unemployed 1 
one-half or one-third of the time, the demand for the products J 
which they consume is proportionally reduced. 

The increase of the product at any time beyond the effective 
demand rapidly lowers prices ; so manufacturers, being on guard 
against over-production, cut off labor to reduce the product; 
and since, by the very act of reducing production, consumption 
is reduced, the effect of this form of competition often is to 
defeat its purpose by distributing the equilibrium of the in- 
dustries. These effects are not always quickly manifested, for 
the reason that those who suffer enforced idleness supply their 
demands for perishable products by drawing from their store 
of savings, while those who are continuously employed save a 
larger part of their earnings ; but the effect is to continually in- 
crease the number and dependence of the poor, and thereby to 
narrow the market for the products of industry. 

An equitable division of labor among all workers, and rela- 
tively equal wages, in conformity with the principles of a sound 
social economy, is one of the conditions essential to universal 
and continued prosperity. Individual misfortune, differences in 
individual economy, inequalities in the numbers who compose 
the families of laboring men, and the power of capital in unjust 



30 THE DISTEIBUTION OF WEALTH. 

measure to absorb the earnings of the workers, would, however, 
still remain the potent factors of inequality. 

An equitable distribution of labor among the workers is neces- 
sary for the general good. How is such distribution to be se- 
cured ? Evidently not by artificial arrangement, nor by the 
direct application of legislative authority. The shutting down 
of iron-mills and factories from time to time, in order to prevent 
over-production, often is, under present 'conditions, a business 
necessity, essential to the welfare of both employer and em- 
ploye. But it is a harsh and unsatisfactory remedy, attended . 
with great loss of labor, and injurious in its effects upon other 
industries. It is a measure open to sdrious abuses ; only tem- 
porary in its results ; and, without combination among all em- 
ployers in the same industry, which in itself is a menace to the 
welfare of other industries, impracticable. The only effective 
and permanent remedy must be sought in some measure or 
policy that will secure to the entire people the opportunity for 
constant employment. Some relief, no doubt, will be found in 
an extended field for the employment of labor. When the old- 
time occupations of woman were taken away she found new 
ones. When she put away the spinning-wheel, the distaff, and 
the loom, she found no time for idle leisure. The training of 
her children, the decoration of her home, and a variety of social 
duties made new requisitions on her time. When the sewing- 
machine multiplied the power of the needle, she increased her 
wardrobe, and added more elaborate ornament to her apparel. 

The demand for a more universal education of the people, it 
is to be hoped, may, in the near future, claim the time of the 
young, and thus, in part, relieve the productive occupations from 
the force of that feverish competition through which first one 
industry and then, in turn, another is depressed by a fluctuating 
surplus that renders values unsteady, and thereby endangers 
capital, which, to guard against possible loss, demands a wider 
margin of profit, and secures it by reducing wages or by re- 
stricting production ; that turns trade into speculation, and 
makes the earnings of labor the stake to be raffled for by the 
gamblers on 'change. 

The nearer values can be kept to a definite standard, and the 
more gradual the changes, the better always for the people. In 



THE DISTRIBUTION OF WEALTH. 31 

the earlier part of the century, before our present industrial 
civilization had swept away the old conditions, each family con- 
sumed a much larger share, than now, of the product of its own 
labor. The houses in which the people dwelt were the direct 
product of their own labor and that of local mechanics. The 
lumber was sawed at the neighboring mill, out of logs cut by 
their own hands, and hauled by their own teams. There were 
then no great yards stacked with sawed and dressed lumber 
shipped from distant localities. The flour consumed in each 
community was ground at the local mill, from wheat grown on 
the farm near by. The clothing of the farmer and of the me- 
chanic was the product of his own household. The food of the 
farmer was supplied from his own farm, and that of the me- 
chanic from the neighborhood in which he dwelt. Each com- 
munity was, in great measure, an independent social and in- 
dustrial organization forming a complete circle for the rounds 
of exchange ; and commerce did not then, as now, sweep in one 
unbroken tide from Maine to California, overleaping mountain 
ranges, gathering volume over a wide-extended sea of human 
industry, and commingling on its crest the products of JS'ew 
England and Illinois ; it was then as but a wave on a little in- 
land lake, which, ere it gathers force or volume, is wasted in 
ripples on the shore near by. 

To-day the farmer and the mechanic buys his clothing ready 
made ; and the money he gives in exchange is carried hundreds 
of miles away. 

The grocery store supplies him with flour, canned fruits, and 
cured meats brought from distant places, and sold at varying 
prices, the net result of the manipulations of two or three sets 
of middle-men, each seeking a profit out of whatever passes 
through his hands. Then the exchange of products was more 
direct, and relatively much smaller in amount. To-day every 
product of labor is tossed into the whirlpool of universal com- 
merce, and each man is engaged in a struggle with every other 
man to get more out than he puts in. 

Instead of sailing in small vessels over the placid waters of a 
quiet inland lake, commerce, in heavy-burdened ships, ranges 
over a storm-swept sea, where only the more experienced and 
skilful mariner can steer clear of hidden rocks, and only the 



32 THE DTSTKIBUTION OF WEALTH. 

old sailor is able to read the portent of a threatening sky, and 
reef his sails before the oncoming of the angry storm, which 
shall wreck the vessel and scatter the cargo of the inexperienced 
adventurer ; where pirates ply their trade and rob the weak ; 
and where greater fortunes are often gathered out of the salvage 
of sunken cargoes than from the profits of legitimate commerce. 
We may not wish for the return of the olden time, when priva- 
tion indeed was more general than now, but the pinch of extreme 
poverty was less severe and more seldom felt ; when there were 
no millionaires and no tramps ; when there was less of luxury, 
but more general content ; but we may invoke the return of one 
of the advantages then enjoyed. The producer and consumer 
were neighbors then ; it would be better if they were neighbors 
now. If, instead of a few great manufacturing centres, manu- 
factures could be so distributed as to bring producer and con- 
sumer into the nearest possible proximity, great benefit, both 
material and moral, would accrue to the people at large. 

Capital is not interested in leading to this result, but the peo- 
ple are. Transportation for the sake of transportation, trade 
for the sake of trade, may furnish to surplus capital opportuni- 
ties for profit ; but labor bears the burden. 

The spirit of American trade is best expressed in that slang 
proverb, " Business is business." A healthy social economy must 
be founded on nobler sentiments than those which gave birth to 
this maxim of commercial piracy. 

Commerce for the purpose of supplying the wants of the 
people is a necessity ; commerce for the purpose of supplying 
opportunities to middle-men is but an organized scheme to levy . 
tribute. Under present conditions of production and trade, 
results like the following are possible. 

Illinois is a State rich in agriculture, capable of supplying food 
for ten millions of people. Suppose she had, within her limits, 
cotton- and woollen-mills, and skilled workmen to operate them, 
enough to supply all the cotton and woollen fabrics required for 
the consumption of the people of the United States. Suppose 
that these industries in her midst had reached the highest de- 
gree of perfection, and that like industries had not yet been 
established elsewhere. Her manufactures supply the wants of 
the whole people. We will assume, further, that she is supplied 



THE DISTEIBUTION OF WEALTH. 33 

with other manufacturing industries sufficient to meet the wants 
of her own people. Her cotton and woollen fabrics are sold in 
every city and village in the nation, bringing in a continual 
flood of money. As all her people need for home consumption 
is supplied at home, she has no need to buy beyond her own 
limits. Her trade with the people of other States is an exchange 
of cottons and woollens for money. The process goes on till 
other States are drained of money. Then comes financial 
pressure. The people who have been buying more than they 
have been selling resort to loans. They borrow from the cajDi- 
talists of Illinois and pay interest. If an attempt be made to 
establish cotton and woollen industries in other States, first capi- 
tal must be secured ; then skilled labor must be brought in, and 
skilled labor is loath to emigrate, except on condition of assured 
employment and higher v^ages. Small mills, burdened with 
interest on capital and higher rates of transportation, and with- 
out the advantage of an established trade, are unable to com- 
pete with the strong and skilfully-managed establishments of 
Illinois. A condition of dependence is brought about, similar to 
that which exists to-day between England and Ireland. 

Here are two islands, separated only by a channel of the sea, 
each enjoying all the advantages of a salubrious climate and a 
fertile soil. Their industries have been developed under the 
same laws, both alike enjoying the advantages of a trade un- 
trammelled by protective duties ; and yet England is rich and 
Ireland is poor. The area of England is less than double the 
area of Ireland; yet the incomes of the English people are 
nearly thirty times as great as those of the people of Ireland ; 
the houses of England average, in value, two and one-half times 
the value of the dwellings of Ireland ; while the rental value of 
the lands of Ireland, per acre, is less than one-third the rental 
value of the lands of England. Why ? England obtained an 
earlier start in industrial progress. Her manufacturing indus- 
tries became established and strong. Ireland grew oats, and 
cattle and hogs, and potatoes; England made cloth and iron. 
JS'ature fixes no bounds to production in manufacturing indus- 
tries, nor is consumption limited by fixed needs; while the 
product of agriculture is measured by the capabilities of the soil, 
and the number of people is the measure of the demand. A 

3 



34 THE DISTEIBUTION OF WEALTH. 

manufacturing industry, in its infancy, in Ireland, could not 
compete with capital and skill in England, where ever}^ industry 
had become a part of an associated group of industries, thus 
securing the greatest possible economy of production in each ; 
and so the Irish kept on raising oats and potatoes, cattle and 
hogs ; while England gathered in the wealth of the nations, and 
her capital flowed abroad in the shape of loans and railway 
bonds, to burden the industries of poorer nations with perpetual 
tribute to the English people ; and, having exhausted the field 
of most profitable investment elsewhere, is now absorbing the 
most profitable industries of the people of the United States. 
True, there were other causes ; but they became effective, and 
produced results through the operation of the leading cause 
which I have stated. 

In time, after the people of other States had sent their money 
to Illinois, and gotten it back in the form of loans, they would 
begin to shij) their products abroad, selling at whatever price 
the market would command, or shipping to Illinois and selling 
in competition with the produce of the farms of Illinois, as the 
Irish sell the produce of their lands in England in competition 
with the English farmer, to pay for what they buy of the Eng- 
lish manufacturer. The accumulated capital of Illinois would 
overflow into the other States in the form of loans; there 
would be an era of apparent prosperity, followed by years of 
adversity and commercial dependence. This, of course, is an 
overdrawn picture of what even might be in the United States ; 
but, in its illustration of the operation of economic laws, under 
certain conditions, it is a true picture. It is essential to' the 
welfare of States, and of communities even smaller than States, 
that the balance of trade be preserved with the world at large. 
The evil which I have illustrated is, in a great measure, self- 
corrective, at the expense, however, of permanent loss to in- 
dividuals and communities. The people of a county, burdened 
with a foreign debt, may consume less food and less clothing, 
and live in meaner houses, and get out of debt ; but when inter- 
est accumulates too rapidly, mortgages mature, and money goes 
out faster than it comes in, and prices of real estate go down, 
and farms begin to fall into the hands of the foreign creditor, it 
is not only those in debt who suffer, but the people of the county, 



THE DISTRIBUTION OF WEALTH. 35 

except those who may be able to thrive upon the adversity 
of others. When such conditions are not confined to a county, 
but spread over a State, the evil is intensified and the period of 
adversity prolonged. 

It has been claimed that the relative conditions which I have 
described exist between the J^ew England and the Western 
States. It is not the purpose here to inquire whether or not 
this claim is well founded ; what I seek to show is, that the way 
is open for such conditions to establish themselves. 

It is to the interest of every community, so far as practicable, 
to maintain commercial and industrial independence. A policy 
shaped to this end will necessarily be subordinated to those con- 
trolling conditions which will confine its operation within some- 
what narrow limits, yet it is a policy which should never be lost 
sight of nor abandoned. 

Money accumulates in the centres of manufacturing and com- 
mercial industries, and goes out again in the form of loans on 
agricultural lands, until the whole country is laid under tribute 
to aggregated wealth at the great money-centres. Every great 
city is the body of an immense commercial octopus, whose in- 
numerable arms reach out and gather in the wealth of the 
tributary area that surrounds and feeds it. 

Until the prices of the products of agriculture have felt the 
effects of a limitation of the agricultural area, the capital em- 
ployed in agriculture in the United States, except in some 
favored localities, will not bear the tax of even a low rate of in- 
terest, unless, in the mean while, the relations of the industries 
shall be somewhat changed by means of legislative modifications 
of conditions and tendencies that now prevail. 

It is my purpose in the following chapters to pursue the in- 
quiries suggested in this : First, to ascertain what are the facts 
with regard to the distribution of the products of labor ; second, 
to consider the economic forces that control production and dis- 
tribution ; third, to ascertain what remedies there are that may 
be applied to the correction of industrial evils, if any are found 
to exist, which are not the necessary outgrowth of essential 
economic conditions. 



30 THE DISTRIBUTION OF WEALTH. 

CHAPTEE III. 

STATISTICS OP PRODUCTION AND DISTRIBUTION. 

The distribution of the products of labor can be ascertained 
only by consulting the facts disclosed by statistics. 

The census of 1880 shows the number of persons of each 
occupation, and gives a carefully-prepared exhibit of all manu- 
facturing and mechanical industries conducted in factory or 
shop, embracing each establishment whose gross annual product 
exceeds five hundred dollars per annum, showing amount of 
capital invested (both personal and real) ; the average number of 
workers employed during the year ; the total amount of wages 
paid (including salaries of managers, etc.) during the year ; the 
total cost of materials used, and the total value of all products. 

The statistics of railways, telegraphs, telephones, steam navi- 
gation, fisheries, insurance, and mining ave also given. The 
statistics of agriculture disclose the number of workers, the 
number of acres and amount of each crop, and the total value of 
the whole, as well as the values of farms and farm property. 

The information contained in the census reports, with other 
statistics embraced in the following chapter, arranged and 
analyzed, enable us to determine with a sufficient degree of 
accuracy, not only the amount of the product, but also the 
manner of its distribution. 

AGRICULTURE. 

The statistics of agriculture of 1880 show the total value of 
the entire agricultural product for the year 1879, including that 
which was consumed on the farm, to be $2,212,540,927. In 
arriving at this estimate, the food of meat-producing animals 
was deducted from the gross product, otherwise this item would 
be twice counted, once in the form of corn and hay, and once 
in the form of cattle and hogs sold or consumed. 

It has been contended that this amount is altogether too low. 
Edward Atkinson adds $1,000,000,000 to cover amount con- 
sumed on the farm. I am unable to find any warrant for this 
addition to the census estimate. The census purports to give 



THE DISTEIBUTION OF WEALTH. 37 

the total value of all products, including the amount consumed 
on the farm and the amount on hand. The value of crops 
appears to have been estimated full high, and I am unable to 
perceive wherein there could have been omissions which, in 
the aggregate, would greatly alter the census figures. Atkin- 
"* son, however, quotes a letter from Mr. Nimmo, chief of the 
Bureau of Statistics, dated October 21, 1884, in which Mr. Nimmo 
says, " The estimate of $3,600,000,000 for the products of agri- 
culture was given me by Mr. J. E. Dodge a year ago, as the 
result of careful investigations, and he firmly adheres to that 
estimate. . . . The census of 1880 gives $2,213,402,564 as the 
estimated value of farm productions. This, however, does not 
include the increased value of live-stock, nor the value of the 
products of pasturage on the public lands. It also omits, to a 
very large extent, the products of horticulture." 

The increased value of live-stock was properly omitted. The 
omitted value of horticultural products could not amount to any 
considerable sum. The orchard and market-garden products are 
included. The total product of pasturage on the public lands 
was relatively a small sum. The ranch business employs but a 
small number of persons and a large amount of capital. It 
belongs to the field of capital, rather than that of agricultural 
labor. But adding all these items claimed to have been omitted 
would not increase the census estimate ten per cent. 

But an explanation of the manner in which Mr. Dodge 
reaches the result so at variance with the amount stated in the 
census reports is given in a table which he calls his corrected 
estimate of the value of farm products of the year covered by 
the census returns. That table is as follows : 

Table No. 1. 

THE PRODUCT OP AGRICULTURE FOR THE TEAR 1879. 

Product. Quantity. Value. Price. 

Meat $800,000,000 . . . 

Poultry and eggs 180,000,000 . . . 

Butter (pounds) 900,000,000 189,000,000 |0.21 

Cheese " 300,000,000 28,500,000 .095 

Milk consumed (gallons) . . . 1,800,000,000 135,000,000 .075 

11,332,600,000 



38 



THE DISTRIBUTION OF WEALTH. 



Product. Quantity. 

Corn (bushels) 1,754,591,676 

Wheat " 459,483,137 

Oats " 407,858,999 

Eye " 19,837,595 

Barley " 43,997,495 

Buckwheat " 11,817,327 

Eice (pounds) 110,131,373 



Hay (tons) 

Irish potatoes (bushels) 
Sweet potatoes " 
Peas and beans " 
Market-garden products 
Orchard products . . . 
Hops (pounds) .... 



35,150,711 

169,458,539 

33,378,693 

9,590,027 



Cane sugar (hhds.) . . 
Maple sugar (pounds) . 
Cane molasses (gallons) 
Sorghum syrup " 
Maple syrup " 

Honey (pounds) . . . 



26,546,378 



178,872 
36,576,061 
16,573,273 
28,444,202 
11,796,048 
25,743,208 



Cotton (pounds) 2,771,797,156 

Wool " 240,681,751 

Hemp (tons) 5,025 

Flax (pounds) 1,555,546 



Tobacco (pounds) 472,661,157 

.... 7,170,951 



Flaxseed (bushels) 
Grass seed " 
Clover seed " 



"Wines (gallons) . 
Beeswax (pounds) 

Total value . 



1,317,701 

1,922,982 



20,000,000 
1,105,689 



Value. 

1694,818,304 

436,968,463 

146,829,240 

14,992,686 

29,302,332 

7,019,492 

6,607,882 

$1,336,538,399 
1409,505,783 

181,848,474 
15,020,412 
14,385,041 
21,761,250 
50,876,154 
6,371,131 

1190,262,462 

116,098,480 
4,754,888 
5,800,646 
9,386,587 
1,796,048 
5,663,506 

143,500,155 

1271,636,121 

67,390,890 

1,005,000 

391,387 

1340,423,398 

138,758,215 

18,963,689 

1,976,552 

11,537,892 

$22,478,133 

12,000,000 

364,877 

$3,726,331,422 



Price. 
$0,396 
.951 
.36 
.756 
.666 
.594 
.06 



$11.65 

$0,483 



In the foregoing table the meat product is estimated 
than double the value of the meat product of 1869, as 



.45 
1.50 



.24 



$90.00 
.13 
.35 
.33 
1.00 
.22 



$0,098 
.28 
200.00 
.25 



$0,085 

$1.25 
1.50 
6.00 



$0.60 
.33 



at more 
given in 



THE DISTRIBUTION OF WEALTH. 39 

the census report of 1870, when it was reported as a separate 
item. The value of poultry and eggs is nearly double the 
amount shown by the census estimates. The butter product is 
given as 93,000,000 pounds in excess of the sum of farm and fac- 
tory product as shown in census returns, and the value is placed at 
twenty-one cents per pound, while the export value, as shown by 
the report of the Treasury Department for the second quarter of 
the fiscal year of 1879 and 1880, was fourteen and one-fifth cents. 
The price of oats is six cents more than the export value during 
the same period, and the price of cheese one-half cent more than 
the export value. Many other values are manifestly too high. 

The estimates of the valu:es of crops made by the Department 
of Agriculture are based on the prices obtained for that portion 
of the product which is sold. The unmerchantable part of the 
product which is consumed on the farm is for this reason valued 
too high. The estimates are made, as a rule, after prices have 
somewhat advanced beyond those obtained for the product 
which is sold early. 

The average price is arrived at by averaging different locali- 
ties in a State, and then by averaging the States. The result 
does not show the average price realized by the farmer. Where 
the prices of corn and oats are highest, there the largest pro- 
portion is consumed on the farm. Much of the corn sold is 
purchased and consumed by farmers elsewhere ; shipments are 
made from where prices are low to where prices, owing to short 
crops, are high, thus adding cost of freight and commissions to 
a considerable part of that which is consumed on farms, in feed- 
ing meat-producing animals and work-animals. I have, in the 
following table, put wheat five cents, corn 3.6 cents, and oats 
four cents lower than the Agricultural Department estimates, 
but have valued the amount consumed on the farm at the average 
price of the entire product, whereas it is in fact considerable 
more. The per cent, of corn shipped from the county is, in the 
Western States, 24.7 ; in :N"ew England, 2.4 ; in Middle States, 10.8. 

Of the total product of $2,212,540,927 for the whole United 
States for the year 1879, as exhibited by the census of 1880, the 
sum of $203,980,137, or $467.45 per capita for each agricultural 
worker, is credited to the State of Illinois.* Eej)orts of the 

* Keport of Department of Agriculture for 1883. 



40 THE DISTRIBUTION OF WEALTH. 

Department of Agriculture of that State give the farm prices of 
agricultural products for that year of every product of impor- 
tance. The quantity of product returned in the census is so 
much greater than that shown by the agricultural reports of 
the State, based upon assessors' returns, as to leave little room 
for doubt that the quantities shown by the census returns fully 
cover, if they do not exceed, the amount of the actual product. 

Statistics of farm crops furnished by assessors are always in- 
complete, and the crop is always in excess of the amount shown 
by assessors' returns. The reason for this is not, as commonly 
asserted, a disposition among farmers to underestimate their 
crops and withhold information, — a disposition sometimes mani- 
fested by the most ignorant, — but the negligent manner in which 
the work of obtaining these statistics is attended to by assessors, 
whose principal duty does not relate to the collection of statis- 
tics of farm crops, and who are often indifferent as to the man- 
ner in which this incidental service is performed. The statistics 
of the census were obtained by persons specially charged with 
that work, which was carefully and conscientiously performed. 
Inaccuracies in reports given by farmers would naturally occur 
more frequently in over-estimates than under-estimates of the 
amount of crops grown. 

In the following table of the agricultural products of the 
State of Illinois for the census year, the quantities given are 
taken from the census of 1880, while the prices of the cereals 
and of hay and potatoes are taken from the agricultural report 
of the State. Prices of other commodities are estimated. 

Table l^o. 2. 

PRODUCTS OF AGRICULTIJRE OF THE STATE OF ILLINOIS FOR THE 

YEAR 1879. 

Product. Quantity. Price. Value. 

Meat product 146,000,000 

Poultry sold or consumed ... 3,000,000 

Butter made on farms (pounds) . . . 53,657,943 |0.15 8,053,690 

Cheese made on farms " ... 1,003,069 .09 92,976 

Milk consumed on farms ... 3,000,000 

Milk sold (gallons) 45,419,719 .07 3,179,380 

;s produced (dozens) 35,978,297 .15 5,396,745 

168,722,791 



THE DISTKIBUTION OF WEAX.TH. 



41 



Product. Quantity. 

Com (bushels) 325,792,481 



Wheat 

Oats 

Eye 

Barley 

Buckwheat 



51,110,502 

63,189,200 

3,121,785 

1,229,523 



Hay (tons) 2,578,736 

Irish potatoes (bushels) 10,365,307 

Sweet potatoes " 249,407 

Peas and beans " 69,248 

Market-garden products .... .... 

Orchard products .... 

Hops (pounds) 7,778 



Maple sugar (pounds) 80,193 

Maple syrup (gallons) 40,077 

Sorghum syrup " 2,265,993 

Honey (pounds) 1,310,806 



Cotton (pounds) 
Wool " 

Hemp (tons) . . 
Flax (tons fibre) 



8,928 
6,093,066 

61 



Tobacco (pounds) 3,935,825 

Flaxseed (bushels) 1,812,438 

Grass seed " 213,329 

Clover seed " 138,191 



Price. 

10.32 
.87 
.22 
.47 
.46 
.60 



16.37 

.50 

.50 

150 



.24 



10.13 

1.00 

.33 

.20 



$0.09 

.28 

2.00 

5.00 



$0.08 
1.00 
1.50 
5.00 



Value. 

1104,253,694 

44,166,136 

13,901,624 

1,467,239 

565,580 

117,315 

$164,471,588 

$15,717,713 

5,182,653 

124,703 

103,872 

959,962 

3,502,583 

1,859 

$25,593,345 

$10,425 

40,077 

755,331 

262,160 

$1,067,993 

$803 

1,706,057 

450 

30,500 

$1,737,810 

$314,866 

1,812,438 

319,993 

690,955 

$3,138,252 



Wines (gallons) 326,323 $0.50 

Beeswax (pounds) 45,640 .33 

Broom com " 11,645,100 .05 

Wood cut (cords) 1,763,334 2.00 

Lumber 

Hungarian seed (bushels) .... 43,776 .50 



$163,160 

15,200 

582,255 

3,526,668 

3,952,800 

21,888 

$8,261,971 



42 THE DISTRIBUTION OF WEALTH. 

Product. Quantity. Value. 

Horses sold $2,800,000 

Castor beans (bushels) 24,344 30,000 

$2,830,000 

Total gross agricultural product $275,823,750 

On tlie 20tli of December, 1879, the price of wheat was much 
higher than at the date taken for the estimate above given ; 
the price of corn had not advanced ; the prices of cattle and 
swine had declined ; while the prices of hay, oats, rye, barley, 
and buckwheat had advanced. 

From the gross product must be deducted the value of the 
food consumed by work and meat-producing animals, and the 
seeds required for the next year. Of the hay grown probably 
eighty-five per cent, was fed on the farm. The corn consumed 
on the farm was, according to the estimate of the Department 
of Agriculture of 1883, sixty-eight per cent. Probably sixty per 
cent, of the oat crop was consumed on the farm. 

The amount required for seed is readily ascertained from the 
acreage of crops as shown by the census report of 1880 Basing 
our estimate on these ratios, we reach the following result : 

Value of hay consumed on the farm $12,360,056 

" " com " u u u 66,722,242 

" " oats " u u li 6,340,974 

Cereals, grass seed, and potatoes, etc., required for 

seed next year 5,730,800 

Total . . . . $91,154,072 

Leaving a net product of $184,669,678, — a sum which is 
$19,310,459 less than the census estimate. 

The report of the Illinois Department of Agriculture for the 

year 1880 shows : 

Value. 

Sheep sold in 1879 191,398 $613,156 

Cattle " " " 409,982 16,751,450 

Swine " " " 1,984,294 16,640,061 

Total $34,004,667 

Average weight of hogs sold, 210 pounds, and average price 
$3.99 per hundred, net. 

But httle beef or mutton was consumed on the farm. 



THE DISTEIBUTION OF WEALTH. 43 

The total population of the State was 3,077,871, forty-four per 
cent, of which, or 1,354,153, were engaged in agriculture, the 
number of agricultural workers being 436,371. 

Mulhall's estimate of the consumption of meat in the United 
States is one hundred and twenty pounds per capita per annum. 
One hundred and twenty-five pounds of pork per capita to the 
agricultural population of the State would, at the prices at 
which that product was sold, amount to $6,670,765, which is 
probably sufficient to cover farm consumption of pork, beef, 
and mutton. This amount, added to the total above, gives a 
total meat product of $40,675,442. To cover omissions in the 
foregoing table I have put the meat product at $46,000,000. 

In 1880 the total number of cattle in Illinois, as shown by the 
census, was 2,384,322. Of these, 865,913 were milch cows. The 
total number of cattle slaughtered or sold for slaughter in the 
State in 1879 probably reached 600,000 ; but those not embraced 
in agricultural reports, used in the home markets principally, 
and slaughtered on the farm, would not average a value of over 
thirty dollars per head. 

The number of hogs in Illinois on June 1, 1880, was 5,170,266 ; 
the number in 1879 was less. The number reported as dying 
with disease in 1879 was 182,877. This number, added to the 
number reported as marketed, would make 2,167,171. Making 
allowance for the number kept over to the next year, and for 
the light weights and inferior quality of many slaughtered on 
the farm, it will be seen that the meat product cannot vary 
greatly from the estimate adopted in the foregoing table. 

The proportion of corn shipped from the county in the "West- 
ern State is given in the census report as 24.7 per cent. The 
aniount shipped from the county in Illinois in 1882 is given by 
the Department of Agriculture as thirty-two per cent. 

The cost to the farmers of Illinois for the year 1879, of agri- 
cultural implements, machinery, wagons, windmills, bagging, 
twine, tools, fencing wire, and salt, and the cost of commercial 
fertilizers, blacksmithing, and the annual outlay in maintaining 
barns and other out-buildings, was not less than $30,000,000. 
Subtracting this sum from the product already ascertained, we 
have a final net product to the farmers of Illinois of $154,669,718, 
or $49,310,419 less than the net product exhibited by the census. 



44 THE DISTEIBUTION OF WEALTH. 

This gives a per capita product to each agricultural worker of 
$354.45. Allowing one-third of this amount for rents or profits 
on capital, we have $236.30 to each worker, and $51,556,572, 
or five per cent, on the value of lands, farming utensils, and 
live-stock (the value of farm dwelKngs not being included), to 
the credit of rent or profit on capital invested. However, in 
the census estimates no deduction was made for expenditures. 
Food for cattle was deducted, but food for work-animals does 
not appear to have been deducted from the gross amount. 

The estimates made of the products of Illinois are no doubt a 
fair standard of comparison by which to judge the estimates of 
the products of other States. Tested by this standard, the 
estimated total product for the United States is too high. 

The total value of sheep, cattle, and swine, slaughtered at 
slaughtering establishments in the United States in 1879, was 
$256,738,906. To obtain farm values, freights and commissions 
must be deducted from this sum. The total value, in the 
hands of farmers, did not exceed $210,000,000. This amount 
does not include animals slaughtered by retail butchers. In 
the following table I have estimated the total product at 
$470,000,000. This may be an under-estimate ; but I am unable 
to find any warrant for an estimate of over $500,000,000. I have 
adopted the value given by Mr. Dodge as to most products, 
many of which are too high. 

Table No. 3. 
products op agriculture, 1879. 

Product. Quantity. Value. Price. 

Meat $470,000,000 

Poultry and eggs : census, 
456,910,916 dozen 95,000,000 

Butter made on farm 

(pounds) 800,000,000 120,000,000 |0. 15 per pound. 

Cheese made on farm 

(pounds) 30,000,000 2,700,000 .09 " " 

Milk consumed, sold (gal- 
lons) 530,129,755 37,109,002 .07 " gallon. 

Milk consumed on farm 

(gallons) 500,000,000 35,000,000 .07 " " 

$759,809,002 



THE DISTRIBUTION OF WEALTH. 



45 



Product. 
Com (bushels) . . . 
Wheat « .... 
Oats " .... 
Eye " . . . . 

Barley " . . . . 
Buckwheat (bushels) . 
Eice (pounds) .... 



Quantity. 

1,754,591,676 

459,483,137 

407,858,999 

19,837,595 

43,977,495 

11,817,327 

110,131,373 



Value. 

1649,199,918 

413,357,679 

130,514,859 

11,898,957 

26,386,497 

7,019,492 

6,607,882 



Hay (tons) 

Irish potatoes (bushels) 
Sweet potatoes " 



Beans " 

Market-garden products 
Orchard products . . 
Hops (pounds) . . . , 



Cane sugar (hogsheads) 
Maple sugar (pounds) 
Cane molasses (gallons) 
Sorghum syrup " 
Maple syrup " 

Honey (pounds) . . . 



Cotton (pounds) . 
Wool " 

Hemp (tons) . . 
riax (pounds) . . 



Tobacco (pounds) 

Flaxseed (bushels) 
Crass seed " 
Clover seed " 



Wines (gallons) . . . 
Beeswax (pounds) . . 

Total 



11,244,984,284 
35,150,711 $351,507,110 



169,458,539 

33,378,693 

6,514,977 

3,075,050 



26,546,378 



36,576,061 
16,573,273 
28,444,202 
11,796,048 
25,743,208 



2,771,797,156 

240,681,751 

5,025 



472,661,157 

7,170,951 
1,317,701 
1,922,982 



20,000,000 



181,848,474 

15,020,412 

3,500,000 

4,612,575 

21,761,250 

50,876,154 

5,709,275 

1183,328,140 



Price. 
$0.36 per bushel. 
.90 " 
.32 " 
.60 " 
.60 " 
.59.4" 
.06 " pound. 



$10.00 per ton. 

$0.48.3 per bushel. 
.45 " " 



1.50 



.20 



pound. 



178,872 $16,098,480 $90.00 per hogsh'd. 



4,754,888 
5,800,646 
9,386,507 
1,796,048 
5,663,506 

$43,500,075 

$271,636,121 

67,390,890 

1,005,000 

391,387 

$340,423,398 
$36,624,357 

$8,963,689 

1,976,552 

11,537,892 

$22,478,133 

$12,000,000 
364,877 

$2,995,019,376 



.13 

.35 

. .33 

1.00 

.22 



pound, 
gallon. 

n 

(( 
pound. 



$0,098 per pound. 

.28 " " 
200.00 " ton. 
.25 " pound. 



$1.25 per bushel. 
1.50 " " 
6.00 " " 



46 THE DISTEIBUTION OF WEALTH. 

Brought forward $2,995,019,376 

Add to cover sales of horses for use of 
others than fanners 100,000,000 

Total $3,095,019,376 

From the above table should be deducted : 

Value of seeds required for next year $87,700,000 

Grain and hay fed to stock . 880,000,000 

$967,700,000 
Net agricultural product $2,127,319,376 

If we accept the figures of Mr. Dodge, we must deduct for seed 
and feed for stock, $1,049,600,000, leaving a net product of 
$2,676,731,422. To this sum should be added value of horses 
and mules sold, to be used for other than agricultural purposes, 
which, I think, I have estimated full high. The net result 
would then be, according to Dodge, $2,776,731,422. 

In the census of 1880 the amount of cheese made on farms is 
given as 27,272,489 pounds ; cheese made in factories as 
215,885,361 pounds. Mr. Dodge gives the total cheese produc- 
tion as 300,000,000 pounds, and then adds an estimate of 
1,800,000,000 gallons of milk consumed. The amount reported 
in the census, as sold to factories and others, is 530,129,755 
pounds. The product given by Dodge would require the milk 
of about 16,000,000 cows. The number reported in the census 
is 12,443,120. He also embraces in his estimate about 4,000,000 
bushels of cow-peas at $1.50 per bushel. 

The total value of agricultural implements manufactured in 
1880 is given in the census table of manufactures as 
$63,640,486 ; that of carriages and wagons, $64,951,615. The 
manufacturers' value of wagons, wheelbarrows, windmills, bag- 
ging, twine, tools, and salt sold annually to farmers and con- 
sumed in the process of agriculture is not less than $50,000,000. 
This would make the total amount of manufactured products 
annually consumed in agriculture $104,951,615. To this must 
be added cost of transportation and commissions and profits of 
middle-men, at least thirty per cent., making $136,437,099. The 
cost of commercial fertilizers used was $28,586,397. The cost 
of fencing purchased of manufacturers, the cost of blacksmith- 



THE DISTEIBUTION OF WEALTH. 47 

ing, and the annual waste of capital invested in barns and other 
out-buildings (not counting the labor of the agricultural classes 
expended in building and repairs) was at least $50,000,000. 
The total amount of the expenses of agriculture in money paid 
to persons engaged in other industries, as here estimated, was 
$215,023,496. This leaves a net product of $1,912,296,880, or, 
if we accept the figures of Mr. Dodge, $2,461,607,926. 

The forest product, consisting of wood and timber cut from 
farm lands, reported in table of product of agriculture, is not 
embraced in the above estimates. The amount is $95,774,735. 
A great part of this product probably represents the labor of 
persons returned in the census as laborers, and classed under 
the head of personal service. 

The advantage of wood and fuel on the farm, not embraced in 
the amount returned as forest product, and the advantage of 
food without the intervention of railway transportation or mid- 
dle-men, may be put down as equivalent to $50,000,000. Adding 
this sum, and the amount of the forest product stated, we obtain 
as the net value of the agricultural product $2,058,071,705. 
There are some products, the aggregate value of which is not 
counted, and some expenses — among others the cost of imported 
breeding animals — which are not included. But if we accept 
the figures of the census, $2,212,540,927, as the we^ product of agri- 
culture for the year 1879, this sum is large enough to cover all pos- 
sible omissions and under-estimates. I will, therefore, adopt that 
sum as the basis of subsequent estimates, although the amount 
is certainly too large, if treated as the net product.* 

The number of laborers returned as engaged in agriculture is 
7,670,497 ; omitting females and males under fifteen years of 
age, the number is 6,491,116. The total number of persons en- 
gaged in all occupations, not including females or males under 

* Comparing the prices of agricultural products of the census year with 
those of 1889, it will he seen that the values of agriculture have suffered 
great reduction. The average price of wheat has gone down from ninety cents 
to seventy cents per bushel ; the average price of corn from thirty-six cents 
to twenty-seven cents per bushel ; the average price of oats from thirty-two 
cents to 22.6 cents per bushel ; and there has been a corresponding reduction 
in the prices of hay and other products. The drouth of the present season 
will, however, reduce the product and advance prices. 



48 THE DISTRIBUTION OF WEALTH. 

fifteen, is 13,919,752. Of those persons classed as laborers under 
the head of personal service, a large number were employed, at 
least during part of the year, in some department of agriculture. 
We may, therefore, assume that the total population supported 
by agriculture was 25,000,000. This is Edward Atkinson's 
estimate, and it cannot vary far from the true number. This 
gives a per capita product of $88.50, or, $288.45 per capita for 
each person employed. 

MANUFACTURES AND MINING. 

I shall now endeavor to ascertain the value of the products 
of other industries. 

Mr. Atkinson estimates the total value of the products of all 
industries at $10,000,000,000 ; and he gives the following table, 
furnished by Joseph Nimmo, chief of Census Bureau : 

Agriculture $3,600,000,000 

Manufactures . 5,369,579,191 

Illuminating gas 30,000,000 

Mining 236,275,408 

Forestry (partly estimated) 455,000,000 

Fisheries 43,046,053 

Meat production and wool clip of ranches (est.) . 40,000,000 

Petroleum (manufactured product) 44,000,000 

Total (materials out) . 19,817,900,000 

Eegarding the estimate of the product of manufactures, he 
quotes Mr. ISTimmo, who says, " I conferred fully with acting 
superintendent of the census, Mr. Geo. W. Eichards, an exceed- 
ingly intelligent and able man, who appears to have a thorough 
understanding of the whole census figures. Eegarding the total 
value of the products of manufacture, he stated to me that, 
while there were some duplications in it, the omissions amount 
to very much more. It is certain that the values are, on the 
average, below the actual values, and that there is a consider- 
able amount overlooked ; besides, the census did not take into 
account the products of any establishment the value of whose 
products was less than five hundred dollars." 

How far this statement is aside from the truth in regard to 



THE DISTRIBUTION OF WEALTH. 49 

the product of agriculture we have already seen. Now, as to 
manufactures. The total gross product of all manufactures, as 
shown by the census, was $5,369,579,191, the amount given in 
the statement of Mr. Nimmo as the net product. The total value 
of materials was $3,396,823,549 ; leaving a net or actual product 
of $1,972,755,642, a little more than one-third of the amount 
given by Mr. Nimmo and adopted by Mr. Atkinson. The ma- 
terials consisted principally of manufactured products, which 
appear in the statement of gross products. For instance, the 
iron and steel product is $296,557,685. The iron and steel prod- 
uct is not an ultimate product, but enters into the manufacture 
of nails, forgings, castings, etc. ; leather appears under seven 
different heads, and then again in boots and shoes and belting. 
Under the head of boots and shoes it appears at different stages 
of progress towards the ultimate product. 

In vol. ii., " Census of the United States," 1880, page 2, notes 
on "statistics of manufactures," appears the following statement : 
" It is also evident that in estimating the contributions made by 
the manufacturing industries, as a whole, to the annual revenue 
of the country a similar deduction should be made. Thus, while 
the aggregate value of the manufactures of the United States is 
reported at $5,369,579,191, the value of the materials consumed 
therein is given at not less than $3,396,823,549. It is the differ- 
ence hetioeen these two sums, $1,972,755,642, which measures the 
net product of our manufacturing industries. This deduction 
would be required to be made were all the materials of 
manufacture drawn in every case directly from agriculture j 
but, as a matter of fact, the product of one industry often 
becomes the materials of another, and the products of this per- 
haps, in turn, the materials of a third industry; and so the 
values of manufactured products are swollen by the repeated 
inclusion of the same original subject-matter. Thus, certain 
amounts of coal, iron-ore, limestone, and labor — not to speak of 
other elements — enter into and make up the value of pig-iron. 
All the latter may, a few months later, become the material of 
the manufacture of a certain quantity of bar-iron, the reported 
value of which, of course, includes the value of the pig-iron as 
well as the labor and other elements in the production of the 
bar. The bar-iron may again become the material for the 

4 



60 THE DISTRIBUTION OF WEALTH. 

manufacture of a certain body of machinery, tlie value of the 
latter including the value of the bar-iron, as well as the labor 
and other elements in its own production. In this way the 
value of the coal, iron-ore, and limestone reappears again and 
again through successive processes of manufacture. And this 
is statistically right. Only in this way can the facts of each 
industry by turns be exhibited. To omit these elements at any 
stage of production would be to misstate the facts of the par- 
ticular industry concerned. But it is evident that this statis- 
tical condition renders it imperative not to consider the aggre- 
gated values of all products of manufacture as an addition to 
the wealth of the country, but, on the contrary, in all compari- 
sons of the nature referred to, the value of materials should be 
uniformly deducted." 

Edward Atkinson (" Distribution of Products," page 129) says 
that he reached the conclusion that the annual product of all 
industries in the United States was $10,000,000,000 in the fol- 
lowing remarkable manner : " First, by converting that por- 
tion of the wheat crop which is consumed in the United States 
into bread, and a large portion of the corn into meal for final 
consumption ; and to this secondary or final form I applied the 
average retail prices. I also ascertained, as nearly as possible, 
the ultimate value of dairy products and the like. Second, I 
converted the known quantity of textile fibres consumed within 
the United States into fabrics, and I then estimated these 
fabrics at their value in finished clothing at the average prices 
which are charged by shopkeepers. Third, I converted the 
known production of metals into machinery and other forms 
ready for final use, and valued them. Fourth, I valued the 
timber product as furniture, dwelling-houses, and the like. 
Fifth, I converted the sum of our imports into a value at its 
final point of consumption, by estimating the cost of distribu- 
tion, and by other similar methods. 

" Of course, this method is one which could not be made 
absolutely correct, especially by a private person working only 
in the intervals of active business." 

Had Mr. Atkinson furnished an inventory of products show- 
ing the result of his labors in the imaginary role of farmer, 
miller, baker and butcher, spinner, weaver and tailor, black- 



THE DISTRIBUTION OF WEALTH. 51 

smith, carpenter and cabinet-maker, with a schedule of retail 
prices attached, it might have added to the interest and humor 
of the explanation. We would have then been advised how 
much of the iron he converted into watch-springs, and how 
much into stoves; how much into pins, and how much into 
pokers ; how much of the timber was converted into joists and 
beams, and how much into matches and tooth picks ; how much 
into pianos and fiddles, and how much into wheelbarrows and 
log wagons. It is not to be wondered at, that when Mr. 
Atkinson found that Mr. Nimmo's statistics brought a result 
corresponding to that which he had reached by a method of 
calculation so intricate and laborious, he was not in a mood to 
question Mr. Nimmo's figures. Mr. Atkinson and Mr. Nimmo 
having verified each other, their statements have been accepted 
as authoritative. 

The following table gives the value of the products of the 
different industries as shown by the census report of 1880 : 

Table No. 4. 

Industries. Products. 

Agriculture |2,212,540,927 

Manufactures ' 1,972,755,642 

Coal 94,558,608 

Salt • 4,762,493 

Petroleum 24,000,000 

Iron-ore 23,156,957 

Copper-ore 9,458,434 

Lead 7,935,140 

Zinc 4,240,006 

Minor metals 3,387,444 

Quarry products 18,000,000 

rish product 43,046,053 

Gold and silver 203,141,764 

Boat-building and repairing (including ships) . 17,063,969 
Lumber in logs not included in agricultural 

product 100,000,000 

New railroads in 1879, 4746 miles, grading 

$5000 per mile 23,730,000 

Eailway and water transportation of freight . . 500,000,000 

Total 15,261,777,437 

Total (agriculturiB omitted) .... |3,049,236,510 



52 THE DISTRIBUTIOIT OF WEALTH. 

The item of " lumber in logs" is an estimate, but Is approxi- 
mately correct. I have estimated the cost of grading new 
railroads at $5000 per mile, which amonnt, considering the 
location of the roads, will fully cover the cost. The cost of iron 
and steel is embraced in " products of manufacture," and of 
ties and timbers in forest products of agriculture, or " products 
of manufacture." 

My statement of the amount of the petroleum product does 
not agree with that of Mr, I^immo quoted above, for the reason 
that, in the figures given by him are embraced 113,000,000 
worth of barrels and tin cans^ and $1,200,000 worth of sulphuric 
acid, as well as other items which do not belong under that 
head. 

INDUSTRIES NOT EMBRACED IN CENSUS REPORTS. 

The employment tables of the census do not purport to em- 
brace the product of the labor of retail butchers, tailors, dress- 
makers or milliners, nor of establishments yielding a gross 
annual product of less than five hundred dollars. Only the 
average number of employes is given; and the total number 
of persons employed is considerably larger. If we deduct from 
the number of persons set down in the occupation tables to each 
industry the number of those whose labor is embraced in the 
employment tables, the remainder Avill represent the number of 
those whose labor product is not included in the value of 
products already given. A large number of carpenters are 
in the employ of railway companies; and allowance must 
also be made for laborers employed in railway construction, 
the value of whose labor is included in the product already 
given. 

Among those classed as carpenters, masons, plasterers, and 
painters, in the occupation tables, are many who are very 
irregularly employed, and many low-grade mechanics, whose 
average income is quite small. I j)i*esent the following estimate 
of wages (or product which is the same in value) of those whose 
labor product is not embraced in the foregoing statement, 
except laborers in railway construction, and seventy-five thou- 
sand lumbermen embraced under head of laborers : 



THE DISTRIBUTION OF WEALTH. 53 

Table l^o. 5. 

PRODUCT OF WORKERS NOT INCLUDED IN EMPLOYMENT TABLES 

OF CENSUS. 

^„„„_„.. „ No. of Wages Average 

occupation. Workers. or Product. Wages. 

Tailors and tailoresses 53,834 $21,533,600 |400 00 

Milliners, dressmakers, seamstresses 181,662 49,957,050 275 00 

Butchers, retail 90,000 36,000,000 400 00 

Jewellers 15,000 6,600,000 400 00 

Blacksmiths 59,812 59,200,000 400 00 

Shoemakers 148,000 20,934,200 350 00 



548,308 1194,224,850 

Painters and paper-hangers .... 49,000 $17,150,000 |350 00 

Plasterers 22,183 7,764,000 350 00 

Masons 78,000 31,200,000 400 00 

Builders and contractors 12,000 12,000,000 1,000 00 

Carpenters 296,300 103,705,000 350 00 

457,483 $171,819,000 

Laborers 1,475,000 |442,500,000 $300 00 



Clerks, salesmen, accountants . . . 445,513 

Agents 18,523 

Saloon-keepers, bar-tenders, etc. . . 68,461 

Traders and dealers 481,450 

Officials and employes of express 

companies 14,860 

Officials and employes of trade and 

transportation 9,702 

Others in trade and transportation . 159,389 



1,197,898 $598,949,000 $500 00 



Total 3,678,689 $1,407,492,850 

If we add this sum, less $53,730,000, the value of labor al- 
ready counted in the items " lumber" and " railway construc- 
tion," to the total product before ascertained, we have the sum 
of $6,615,540,287. 

The number of workers whose labor product is now included 
in this total is 15,074,981. The number of workers in all occupa- 
tions reported in the census, as shown in the occupation tables, is 
17,392,099. The number whose labor is embraced in the fore- 
going estimates is therefore 2,317,118 less than the whole num- 



54 THE DISTRIBUTION OF WEALTH. 

ber of workers. The number of workers returned under the 
head of "telegraphs" and "telephones" is 18,256 ; under the head 
of " personal and professional service" is 4,074,238. Of these 
1,859,223 are classed as " laborers." The nature of the work 
performed by the persons designated as laborers not being 
stated, it cannot be ascertained to what extent their work may 
be properly classed under the head of personal service. But if 
they should all be considered as engaged in some form of crea- 
tive industry, the number already included in the foregoing 
estimate is only 102,103 less than the total number of workers 
engaged in constructive work, or in work the cost of which was 
added to the value of the product. The work of persons en- 
gaged in transportation or trade enters into the value of the 
product passing through their hands, just as the work bf the 
farmer or manufacturer. 

The cost of production and of transportation and the wages 
of merchants, clerks, book-keepers, travelling salesmen, traders, 
and all middle-men, are already included. There yet remains to 
consider the earnings of capital employed in trade, which enter 
into the price of the product as distributed at retail. There 
must be added a sum sufficient to cover the rent of buildings 
and the profits of capital employed in the wholesale and retail 
trade. There are no statistics which furnish adequate data for 
an estimate of the amount of the contribution to capital in this 
form; $500,000,000, which is ten per cent, of $5,000,000,000, will 
not exceed the true amount, and this we will assume to be the 
earnings of capital employed in trade. To this we will add 
$30,000,000, Mr. Nimmo's estimate of the value of illuminating 
gas, and $40,000,000, his estimate of the meat product and 
wool clip of the ranches, — items which have not yet been 
counted. This gives a total product of $7,185,540,287. This 
sum I regard as adequate to express the total product of 
all industries of the United States in 1879. The only way in 
which the amount can be materially increased is by raising the 
estimate of the earnings of capital in trade, or of the wages of 
those classes of workers whose wages are not embraced in the 
returns of the census. If we increase our estimate of the earn- 
ings of capital in trade, the share of the capital of the total 
product will be increased. If we increase the estimate of the 



THE DISTRIBUTION OF WEALTH. 55 

wages of the workers whose wages are not embraced in the 
census returns, the actual earnings of capital will remain the 
same, while the share of labor will be increased absolutely and 
relatively. But no estimates within the scope of reasonable 
limits will greatly modify the general results arrived at. 

There is no method by which the profits of capital employed 
in agriculture may be determined. The amount of capital em- 
ployed in agriculture, including land, according to census esti- 
mates, is not less than $12,000,000,000. Three per cent, of this 
sum would be 1360,000,000, leaving to the credit of labor em- 
ployed in agriculture $1,852,540,927, or $241.52 to each worker. 

WAGES. 

Table ISTo. 6. 

wages in industries other than agriculture, as shown 
by census. 

Occupation. No. Employed. 

Manufacturing and mechanical . 2,732,595 
Mining coal and non-precious 

metals 229,475 

Mining gold and silver .... 75,000 * 

Quarries 39,000 f 

Petroleum 9,869 

Salt 4,289 

Kailway employes 418,957 

Merchants' steam-craft .... 63,843 

Fisheries 131,426 

Boat-building 21,345 

Telegraphs 14,928 

Telephones 3,338 

Total 3,744,065 

Omitting telegraphs and tele- 
phones 3,725,799 



* Estimated. 

t Census returns highest number employed during the year, not average 
number, as in other industries ; the average number is much smaller. The 
total wages are much less than the amount given. 



Total Annual 


Average 


Wages. 


Wages. 


$947,953,795 


1346.98 


71,992,502 


346.73 


60,000,000 * 


800.00* 


15,000,000 * 


384.61* 


4,381,572 


45410 


1,260,023 


293.77 


195,350,013 


466.27 


25,982,803 


406.98 


39,427,800 * 


300.00* 


12,713,813 


595.63 


4,886,128 


827.30 


901,400* 


300.00* 


11,379,849,849 


1368.54 


$1,374,062,821 





56 THE DISTRIBUTION OF WEALTH. 

The total net product of the above-enumerated industries, 
telegraphs and telephones excepted, after deducting materials, 
and the product of the passenger traffic on railways, was 
$2,925,506,510. Deducting $1,374,062,321, the total amount of 
wages paid, from the value of the product, there remains the 
sum of $1,551,444,189 to cover any expenses which have not 
been deducted, to supply waste of capital, and apply as profits 
on capital invested. 

I omit the receipts of railways on account of passenger traffic, 
for the reason that a large part of these receipts represents dis- 
tribution and not production. The larger part, perhaps, should 
be credited to production ; but it cannot be ascertained as a 
separate element, and is covered in the form of salaries of 
persons engaged in trade. 

The earnings of railways were as follows : 

Passenger traffic |144,101,709 

Express earnings 8,828,259 

Mail services 10,472,813 

Freight 417,047,813 

Total 1580,450,594 

Under the head of " freight" are included $902,055 of " earn 
ings not analyzed." 

The amount added to the value of the product by transporta- 
tion is expressed in the amount of charges for freight, express, 
etc. The expenses of railway companies are not deducted from 
amount of product in tabular statement No. 7, which appear in 
this chapter, for the reason that these " expenses" cover cost of 
maintaining capital, and improvements as well. The cost of 
maintaining capital is not deducted from product of other in- 
dustries in column showing product, and should not be, therefore, 
in case of railways. 

The net product of the manufacturing and mechanical indus- 
tries is $1,972,755,642. The amount of wages paid is $947,953,975. 
The product remaining is $1,024,801,847. The total capital 
employed in the manufacturing, and mechanical industries is 
returned at $2,790,272,606, a little over $1000 to each worker. 
The claim has been made that this amount is not sufficiently 
large. It does not cover the value of rented buildings, and 



THE DISTRIBUTION OF WEALTH. 57 

probably does not embrace the greater portion of borrowed 
capital ; and yet a considerable portion of borrowed capital is 
no doubt included. 

The annual consumption of capital occasioned by the wear 
and destruction of buildings, machinery, and tools, and in the 
destruction of stock by fire, and the waste of machinery 
occasioned by the progress of invention, cannot exceed ten per 
cent, upon the capital invested ; it is probably very much less. 

If we assume $3,000,000,000 as the actual amount of capital 
invested, and estimate the amount of taxes paid as one per cent., 
and the waste of capital at ten per cent., and deduct the amount 
of taxes and waste of capital from the manufacturers' net product 
after paying wages, we have remaining $694,801,847, or 23.16 
per cent, on the capital employed. 

It is claimed by Mr. Nimmo that the census valuation of 
products of manufacturing industries is too low ; and the esti- 
mate I have made of the amount required to supply the waste 
of capital I believe to be too high. 

The same rule applied to the cotton-goods industry gives a 
net profit of 13.26 per cent. ; applied to the woollen-goods in- 
dustry it shows a net profit of 13.45 per cent. ; to blast-furnace 
industry, 7.13 per cent. ; steel-rail industry, 55.9 per cent.* 

In the aggregate iron and steel industries in the United States, 
the surplus, after deducting wages and materials, is 22.47 per 
cent. In the manufacture of flouring- and grist-mill products 
the surplus is 26.56 per cent., in meat slaughtering and meat 
packing the surplus is 51.22 per cent., in the manufacture of 
boots and shoes the surplus is 47.92 per cent., and in the manu 
facture of agricultural implements the surplus is thirty-five 
per cent. 

The wear and the displacement of machinery resulting from 
new inventions in different manufacturing industries varies 
greatly ; and a rate per cent, which would represent the average 
waste of capital in all the industries could not be applied to 
particular industries. 

* Instead of saying net profit, it would be more accurate to say a net con- 
tribution to capital of the given per cent, of the capital shown to be invested. 
A portion of this amount goes to pay rent and interest on borrowed capital. 
What portion the census does not inform us. 



58 THE DISTRIBUTION OF WEALTH. 

The annual dividends of New England manufacturing com- 
panies, from the year 1877 to the year 1886 inclusive, range 
from nothing to twenty per cent. The average dividends made 
by seven different establishments showing the largest dividends, 
for this period of ten years, are 18.2 per cent., 14.9 per cent., 
13.5 per cent., 12.1 per cent., 10.7 per cent., 9.2 per cent., and 
8.6 per cent. 

Since accrued earnings are often invested in new buildings and 
machinery, which represent an increase of capital, and do not 
in such cases appear in the form of dividends, dividends de- 
clared may represent only a portion of accrued profits. 

The Pall Mall Gazette recently published the results of the 
quarterly stock takings of nineteen Lancashire cotton-spinning 
companies. The statement is as follows : 

Per cent, per Dividends 
company. anuum<>o ^^^^f 

Dowry 14J 9 

Equitable 9^ 

Ivy 18 llj 

Leesbrook 2^ 10 

Kigefleld 18 llj 

Eochdale 39 10} 

Stanley 9|- 

Duke 19 12 

Albert 9 9 

Hathersbaw 10 

E"ew Earth 9 

Park Side 15 10 

Eoyton 15 10 

Hollinwood 20 10 

"West End 11} 10 

Lees Union 18 7} 

Grosvenor 20 10 

Hope 17 

Oak 16 

If to the amount of the wages of those employed in the speci- 
fied industries of Table No. 6 we add the wages of retail butchers, 
mechanics, traders, and others embraced in Table No. 5, we ob- 
tain the total amount of the earnings of labor in all the creative 
industries except agriculture. The result is, — 



THE DISTKIBUTION OF WEAX.TH. 59 

Wages of Table No. 6 $1,374,062,321 

" " Table No. 5 1,407,492,850 

Total earnings of labor except agriculture |2,781, 655,171 

Earnings of labor in agriculture 1,852,540,927 

Total wages in all creative industries $4,634,096,098 

Number of workers in all industries except agriculture . . . 7,404,488 

" " " agriculture 7,670,493 

Total nmnber of tbose wbose earnings are embraced in product 15,074,981 
Average wages to each worker in all industries except agri- 
culture 1375.65 

Allowing three per cent, on capital employed in agriculture to 

tbe credit of profits, there remains to the credit of labor . . 1,852,540,927 

Average wages in agriculture would be 241.52 

Profits reserved to capital in agriculture 360,000,000 

Portion of product reserved by capital in other industries . . 2,191,464,189 

The expenses of railways, other than those included under 
the head of wages, were, not including taxes, $144,166,288. 
Fuel for steam-craft costs about $15,000,000; and $16,800,000 
will cover the waste of capital not already covered under the 
head of wages. The waste of capital in all other industries 
besides agriculture, railways, and steam-craft, I have placed at 
$400,000,000, as a sum sufficient to cover the entire waste of 
capital employed in the production of the values embraced in 
the total product stated. Allowance has already been made for 
the waste of capital in agriculture. 

The total amount of direct taxes for the census year is given 
as $312,750,721. $130,000,000 will closely approximate the 
amount of taxes paid by the capital (agriculture omitted) em- 
ployed in the production of the values embraced in the fore- 
going total. The sum of $705,966,208 we will therefore assume 
covers the waste of capital and direct taxes. Deducting this 
amount from the product reserved by capital, we have remain- 
ing to the credit of capital at the end of the year $1,485,478,981. 

The rewards of labor in agriculture are less uniform than in 
any other industry. While the average is given as $241.52, in 
some localities the average will not exceed one hundred dol- 
lars ; and, as to individuals, the range will run from nothing to 
six hundred dollars or more. 



60 THE DISTKIBUTION OF WEALTH. 

SUMMARY STATEMENT. 

Total number employed in agriculture 7,670,493 

** " " other creative industries 7,404,488 

" " " all creative industries 15,074,981 

" " " persona land professional service, 

telegraphs and telephones . . . • 2,317,118 

Total number employed in all industries 17,392,099 

Total value of product of agriculture .$2,212,540,927 

Estimated product of industries not tabulated in census . . . 1,407,492,850 

Product of manufacturing and mechanical industries .... 1,972,755,642 
Product of other tabulated industries and timber not otherwise 

counted (see Table No. 4) 622,750,868 

Kailway and water transportation of freight 500,000,000 

Cost of capital employed in trade, estimated 500,000,000 

Illuminating gas 30,000,000 

Wool clip and meat product on ranches 40,000,000 

Total product 17,185,540,287 

Cost of distribution as included in foregoing statement (about 

fifty per cent, on value of product distributed) 1 1,698, 944, 000 

Total amount of wages or earnings of labor in all creative 

industries $4 634,096,098 

Portion of product reserved by capital 2,551,444,189 

<' " credited to capital in agriculture .... 360,000,000 

" " reserved by capital in other industries . . 2,191,444,189 

Earnings of railways in passenger traffic and mail service . . 154,574,522 

" " capital in all industries except agriculture . . . 2,346,018,711 

Amount of direct taxes and waste of capital, not including 

agriculture 1705,966,208 

Balance remaining to the credit of capital in industries other 

than agriculture 1,640,052,513 

Product to each worker in agriculture |288.45 

" " " all industries 476.65 

" " " manufacturing 721.93 

Average wages in all creative industries 307.50 

'' " " " " except agriculture 375.65 

" " in manufacturing and mechanical industries .... 346.98 

** '♦ in agriculture . . . ■ 241.52 

«' «' Table No. 5, estimated 382.60 

" " in trade, estimated 500.00 



THE DISTRIBUTION OF WEALTH. 61 

Contribution to capital in agriculture, less taxes $240,000,000 

" " " other industries 1,640,052,513 

Interest on national debt, paid in 1879 105,327,949 

" " State and municipal debt, 1879 . 66,062,740 

Kent of dwellings in excess of cost of maintenance, estimated 30,000,000 
Interest on moneys loaned or sales on credit to farmers and 
others, not including money invested in manufacture, 

mining, trade, or transportation, estimated 70,000,000 

Total contribution to capital in 1879 |2,151,443,202 

Deduct labor cost of banking and brokerage paid by capital, 
herein embraced, estimated 25,000,000 

Net contribution to capital in 1879 $2,126,443,202 

Express, telephone, telegraph, and street-car companies have 
not been embraced in foregoing statement, it being impracti- 
cable to determine their additional contribution to value of 
product considered. If taken into account, general results 
would be little altered, but the relative share of capital would 
be increased. 

Taxes on agriculture may be stated relatively too high. But 
if all corrections were made so as to conform strictly to true 
amounts, and all omissions were supplied, general results would 
not vary greatly from the figures here exhibited. The contri- 
bution to capital in the form of cost of distribution is probably 
greater than is here shown. The contribution to capital arising 
out of different forms of speculation is not shown. 

It will be observed that the question as to what are the 
profits of particular industries is not essentially involved in 
determining the shares of capital and labor of the total product. 
We have ascertained with sufficient accuracy the amount of 
wages earned, and the total value of the product. What is not 
distributed as earnings of labor goes to capital. 

The addition to product by reason of foreign importations 
would be the increase of value of imports over cost. The labor 
cost of distribution is counted. The increase would go to the 
share of capital. 

The following table exhibits the industries in detail. Tele- 
graphs and telephones are included, and passenger traffic is 
embraced in railway product. The figures are taken from the 
census of 1880, except as otherwise noted. 



62 



THE DISTEIBUTION OP WEALTH. 



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THE DISTRIBUTION OF WEALTH. 63 

From the statement of product furnished by Mr. ISTimmo and 
adopted by Mr. Atkinson, the cost of distribution and the prod- 
uct embraced in Table No. 5 both appear to be omitted. The 
aggregate of these omitted products is $3,006,426,850. Deduct- 
ing this amount from the total product as shown in this chapter, 
we have a remaining product of $4,179,103,437 against Mr. 
Atkinson's total of $9,817,900,000,— less than one-half. 

The inequalities of distribution do not fully appear in the 
foregoing exhibit. While the average wages in the different 
industries are shown to vary greatly, the range of individual 
wages, which is not shown, is from one hundred dollars or less 
to the highest salary paid. 

Among the causes of these wide differences is the fact that 
the number of skilled workers is relatively small. There were 
returned as " laborers" in 1880, — that is, persons without a trade 
or special occupation, — 1,859,223 workers, of whom 1,616,504 
were males between sixteen and fifty-nine years of age. The 
number of agricultural laborers (owners or proprietors of farms 
not included) is 3,323,876. 

The excessive ratio of crude to skilled labor is in great meas- 
ure owing to the following causes : (1) foreign immigration, (2) 
the natural immobility of labor, and (3) to the obstructions 
placed in the way of industrial education by the opposition of 
the workers in skilled industries. 

In order to measure the full effect of the large contribution to 
capital, shown in the distribution of the annual product, we 
must take into account the fact that the capital which is most 
widely distributed — that is, capital employed in agriculture — 
receives but a small share of this contribution, and that the reve- 
nue-bearing capital of the country is owned by a comparatively 
small number of persons. 

The effect is naturally and necessarily a rapid aggregation of 
the durable property and credits of the country, which repre- 
sent the annual savings of industry, in the hands of the few, 
the loss of industrial independence on the part of the working 
people, and the administration of the wealth of the country 
without due regard to the interests of those who produce it. 

The report of the Bureau of Labor of the State of Massachu- 
setts for the year 1888 shows the following : 



64 THE DISTRIBUTION OF WEALTH. 

The average earnings to each worker in manufacturing in- 
dustries were $402.02, ranging from $276.31 to $789.11 for the 
year 1888. 

The wages paid amounted in 1887 to 66.02 per cent., and in 
1888 to 63.92 per cent, of the total product of the industries 
(net product after deducting cost of materials) considered. The 
amount devoted to " profit and minor expenses" was, in 1887, 
33.98 per cent., and in 1888, 36.08 per cent, of the product. 

The percentage of the product devoted to " profit and minor 
expenses" in certain specified industries was as follows : 

Industry. 1887. 1888. 

Boots and shoes 23.20 20.93 

Carpetings 41.47 40.45 

Cotton goods 41.21 42.29 

Leather 40.19 42.93 

Metals and metal goods 43.39 42.68 

Woollen goods 53.98 52.63 

Worsted goods 33.98 36.08 

The percentage ratio of " profit and minor expenses" to the 
capital employed was : 

Industry. 1887. 1888. 

Boots and shoes 22.33 18.30 

Carpetings 15.67 15.42 

Cotton goods 13.05 14.70 

Leather 20.06 23.71 

Metals and metallic goods 25.82 24.77 

Woollen goods 22.15 20.77 

Worsted goods 13.36 15.24 

The increase of capital devoted to production in 1887 ovei 
1886 was 9.43 per cent. ; the increase in the value of the goods 
produced was 5.29 per cent. 

The proportion of the product to the full capacity of the estah- 
lishments was, in 1886, 77.48 per cent., and in 1887, 77.80 per cent. 

The report of the Bureau of Labor of the State of Connec- 
ticut for the year 1889 shows the following : 

INumber of industries considered 22 

Number of establishments embraced in report 241 

Total capital employed $85,863,552.26 

Totalproduct 85,929,133.48 



THE DISTBIBUTION OF WEALTH. 65 

Cost of stock or materials $45,368,405.47 

Cost of manufacturing (less interest, rents, and taxes) .... 31,621,592.93 

Kent, interest, and taxes 1,690,420.52 

Net profits 7,248,711.51 

Wages paid 22,432,824.66 

Number of hands employed 53,147 

"Wages paid are per cent, of net product 55.3 

Number of employes classed as superintendents, book-keepers, 
salesmen, and not included in "number of bands em- 
ployed" 2,703 

The number classed as superintendents are 5.08 per cent, of 
wage -earners. Cost of superintendence is 15.08 per cent, of 
wages paid and 4.32 per cent, of the cost of goods manufactured. 

Average wages of persons classed under head of superintendence . |1251.80 

" " all other workers 360.30 

" " all employes 401.66 

The net profits of capital in the specified industries are stated 
as follows: 

Industry. Per cent, of Profit 

Bakeries 15.51 

Brass 9.68 

Clocks 1.73 

Corsets 13.32 

Cotton goods 7.03 

Cutlery 12.78 

Carriages 11.39 

Forgings 7.94 

Hardware 7.64 

Hats 13.11 

Iron foundries 12.86 

Iron, malleable 7.41 

Knit goods 15.20 

Machine-shops 10.31 

Paper boxes 25.19 

Paper-mills 12.58 

Printing and publishing 3.80 

Eubber goods .86 

Shoes 7.61 

Silk goods 12.32 

Silver plating 7.04 

Woollen goods 7.41 

General average 8.44 

5 



66 THE DISTKIBUTION OF WEALTH. 

The net profit here given is after the payment of taxes, 
interest, and rents. 

It would add to the value of these reports, if it were made 
clear just what is embraced under the head of capital, and what 
are the values placed upon land, machinery, buildings, etc. In 
Connecticut the information is furnished voluntarily, some man- 
ufacturers refusing to make statements; and, from the report 
of the commissioner, it appears that there existed among manu- 
facturers the apprehension that the public might be misled in the 
direction of an over-estimate of the profits made, and that no ac- 
count would be taken of the losses incurred bythose who fail. So, 
in the absence of any showing as to the manner in which " capital" 
was itemized in the statements made, we may be excused if we 
express some doubt as to the entire accuracy of these reports. It 
is possible that borrowed capital may have been included under 
the head of " capital." The work of the labor bureaus in both 
Massachusetts and Connecticut is not lacking in accuracy or com- 
pleteness. But the voluntary statements of private individuals 
are necessarily exposed to the suspicion of being more or less 
modified to accord with the purposes of those who make them. 
From the foregoing statistics of Massachusetts and Connecticut, 
it appears that the worker (including superintendence) receives 
as wages from fifty -five to sixty-six per cent, of the product. In 
these States less than twenty per cent, of the wage-earners in 
manufacturing industries own their own homes. Those who pay 
rent will, on the average, if heads of families, spend one-fifth of 
their earnings for rent. In paying out their earnings for articles 
of food, clothing, and other things purchased at retail, ten per 
cent, at least of the expenditure is a contribution to capital in the 
form of profits on trade and rent of buildings occupied for pur- 
poses of trade. And, considering all factors that enter into the 
problem, it is safe to say that over one-half of the labor product 
of the wage-earners in manufacturing industries is, in some 
form, absorbed by capital ; and this in addition to the amount 
required for the maintenance of capital. 

In agricultural industries the same relation between labor and 
capital does not exist, except in part. Such, however, is the asso- 
ciation of the industries, that what touches one reaches all, as a 
chain of lakes is drained by an outlet from one of the number. 



THE DISTRIBUTION OF WEALTH. 67 

In order to obtain the measure of the profits on capital em- 
ployed in agriculture, where the worker generally owns the 
capital which he employs, we may deduct from the value of 
the gross product the labor cost of production, estimating the 
cost of labor at the customary wages paid to agricultural labor- 
ers hired by the day or month. This method universally ap- 
plied to the agriculture of the United States would exhibit no 
margin of profit. If we measure the profits of agricultural 
capital by the average rental paid, which ranges from one-third 
to one-half the gross product, the landlord paying taxes and 
maintaining improvements and defraying cost of supervising 
tenants, the margin of profit through a series of years will 
range from nothing to ten per cent., while the average earnings 
set apart to the share of labor will fall to two hundred dollars, or 
less, per year. This, however, is on the basis of the crops and 
prices of the year 1879. Prices during subsequent years have 
been on an average much lower. 

It will be seen that in the division of the total product of the 
nation, agricultural labor and capital employed in agriculture 
have received the smallest shares awarded to any class of labor 
or capital. 

WORKERS EMPLOYED IN PERSONAL AND PROFESSIONAL SERVICE. 

The number of persons returned in census of 1880, as engaged 
in personal and professional service, is 4,074,238. Of these, 
17,000 of those whose occupations are designated perform work 
the cost of which enters into the value of products. Of those 
whose occupation is given, whose labor does not enter directly 
into the cost of production, and whose earnings are therefore 
omitted from the estimate of value of products, the following 
is a complete list : 

Table :N^o. 8. 

No. 1. 

Actors . . 4,812 

Showmen and employes of shows 2,604 

Artists and teachers of art 9,104 

Musicians and teachers of music 30,477 

Billiard- and bowling-saloon keepers and employes . . 1,543 

Authors, lecturers, literary persons 1,131 

Journahsts . 12,308 

61,979 



68 THE DISTEIBUTION OF WEALTH. 

No. 2. 

Chemists, assayers, etc 1,961 

Designers, draughtsmen, and inventors 2,820 

Collectors and claim agents 4,213 

Clerks and copyists, not otherwise specified .... 25,467 

Watchmen (private) and detectives 13,384 

Lawyers 64,137 

Teachers and scientific persons 227,710 

339,692 
No. 3. 

' Midwives 2,118 

Nurses 13,483 

Dentists 12,314 

Veterinary surgeons 2,130 

Physicians and surgeons 85,671 

Clergymen 64,698 

Sextons 2,449 

182,863 
No. 4. 

Barbers and hair-dressers 44,851 

Launderers and laundresses 121,942 

Janitors 6,763 

Messengers 13,985 

Domestic servants 1,075,635 

Livery-stable keepers 14,213 

Hostlers 31,697 

1,309,086 
No. 5. 

Hotel-keepers 32,453 

Lodging-house keepers 77,413 

Kestaurant-keepers 13,074 

Clerks in hotels and restaurants 10,916 

Other employes of hotels and restaurants . , . . , 77,413 

211,269 
No. 6. 

OfiScers of United States army and navy 2,600 

Soldiers, sailors, and marines 24,161 

Officials of government 67,081 

Clerks in government offices 16,849 

Employes of government 31,601 

" " charitable institutions 2,396 

144,688 
Total number of persons engaged in personal 
and professional service, the character of 

whose employment is designated 2,249,577 



THE DISTRIBUTION OF WEALTH. 69 

The support of the professional and personal service .class is 
borne by those engaged in productive labor. Those designated 
in subdivision No. 6, of the foregoing table, derive their support 
from all classes equally, except in so far as our system of raising 
revenue may bear unequally on different classes. The support 
of those designated in subdivision No. 3 may be considered as 
resting about one-third on the agricultural, and two-thirds on 
other classes. Farmers " doctor" a good deal, but their spiritual 
wants are administered to by clergymen in receipt of small 
salaries. The agricultural classes may contribute one-fourth of 
those designated in Nos. 1 and 2, and one-fifth of the support 
of those designated in No. 4, and one-twentieth of the support 
of those designated in No. 5. On the basis of these assumptions, 
the support of those engaged in professional and personal service 
would rest, about one-eighth on the agricultural, and seven- 
eighths on the other classes. Assuming that the earnings of 
this class of persons amount to $700,000,000, the agricultural 
classes would, on this basis, contribute out of that portion of 
the total product set apart to their credit $87,500,000, and 
$612,500,000 would be derived from the other classes. But 
since " the other classes" include those engaged in professional 
and personal service, who employ each other, something like 
one-fifth of their earnings would consist of wages derived from 
their own class, and there would remain about $472,500,000 to 
be contributed by workers in other productive industries be- 
sides agricultural. The greater part of this amount is paid from 
the fund representing the total wages of labor and that portion 
of the product already assigned to the maintenance of capital, 
though a very considerable amount is derived out of the fund 
set to the credit of the profits of capital. If we assume that 
the amount of $172,500,000 is paid from this fund, the balance 
remaining to the credit of capital would be $1,954,943,202. 
What becomes of this fund ? 

First, there is that part which is consumed in the form of 
perishable products ; second, that part which is converted into 
new factories, mills, and increase of machinery, new railways, 
and other forms of tangible and durable property ; and third, 
that part which is invested in notes, bonds, and mortgages, and 
which reappears in the form of property in the hands of farm- 



70 THE DISTRIBUTION OF WEALTH. 

ers, laborers, and other debtors ; or is represented by the amount 
of the consumption of other classes beyond their incomes ; to 
the extent of which they are necessarily in debt. The entire 
labor product, each year, is consumed in some form ; if in the 
form of perishable products, it is destroyed ; if in the form of in- 
vestment in buildings, or like durable property, it represents so 
much added to the national wealth. 

MANUFACTURES OF ONE HUNDRED LEADING CITIES. 

The census of 1880 gives, separately, the statistics of manu- 
facturing and mechanical industries in one hundred leading cities 
of the United States, from which I have deduced the following 
summary : 

Total population of one hundred leading cities 9,100,745 

Capital employed in cities 11,399,619,618.00 

" " outside . , 1,590,652,988.00 

Total capital employed $2,990,272,606.00 

Materials used in cities $1,925,987,807.00 

" » outside 1,470,835,742.00 

Total materials used $3,396,823,549.00 



product $5,369,579,191.00 

Net product in cities $1,119,381,024.00 

«' " outside 853,375,618.00 

Total net product $1,972,756,642.00 

Product to each worker $721.93 

Per cent, of capital employed in cities, of net product . . 125.0 

II '< «' outside 186.0 

Number of hands employed in cities 1,451,177 

» " » outside 1,280,788 

Total number of hands 2,731,965 

Wages paid in cities $561,710,845.00 

" " outside 386,242,950.00 

Average annual wages 346.98 

u ii " in cities 388.45 

u li <« outside 301.56 



THE DISTEIBUTION OF WEALTH. 71 

Total number of workers in all occupations 17,392,099 

" " " " male 14,744,942 

" " " " female 2,647,157 

" " « " males over fifteen . . 13,919,755 

*' " " " " " sixty . . 933,644 

Per cent, of females, of all ages, and of males under fifteen . . . 24.9 

Total number engaged in agriculture 7,670,493 

" " " " females 594,510 

" " " " males under fifteen .... 584,867 

" " " " " over sixty 662,938 

" " " " " '' fifteen 6,491,146 

Per cent, of females, all ages, and males under fifteen 15.37 

Total number classed under head of professional and personal service 4,074,238 

Domestic servants 1,075,655 

Per cent, of females, all ages, and of children under fifteen in pro- 
fessional and personal service 36.54 

Per cent, of females and males under fifteen, domestic servants . 0.90 

Number engaged in professional and personal services, about . . 2,300,000 

Total number engaged in trade and transportation 1,810,256 

Per cent, of females, all ages, and males under fifteen 4.7 

Total engaged in manufacturing and mining 3,837,112 

" males 3,205,124 

" " over sixty . . . 139,602 

'» " under fifteen. . 86,677 

" females 631,988 

" " under fifteen . 46,930 

" " over sixty . . 7,901 

The following is a summary statement of Edward Atkinson's 
deductions and estimates of product and distribution for the 
census year 1879.* 

Total annual product $10,000,000,000 

Domestic consumption on farms, and domestic product of 
families not exchanged 1,000,000,000 

Commercial product 19,000,000,000 

Share of capitalists, five per cent 1450,000,000 

Savings of people, " " 450,000,000 

Addition to the wealth of the nation 900,000,000 

"Wages fund , 18,100,000,000 

* Atkinson, Distribution of Products, page 141. 








































72 THE DISTKIBUTION OF WEALTH. 

Share of 1,100,000 persons engaged in mental and adminis- 
trative work, $1000 eacli, including teacliers, scientists, 
authors, artisans, young lawyers and clergymen, mer- 
chants, tradesmen, officials |1, 100,000,000 

16,200,000 farmers, mechanics, artisans, operators, clerks, 

dress-makers, laborers, and others at 1432 each 7,000,000,000 

Total $8,100,000,000 

Total assumed product accounted for above $10,000,000,000 

He then adds 5 per cent, upon this gross product to account 
for the larger consumption of well-to-do-farmers, trades- 
men, shop-keepers, and other classes, making 500,000,000 

$10,500,000,000 
He says (" Distribution of Products," page 109), " In general, it 
may be said that the necessary qualifications by which the aver- 
age wages disclosed by the census, in respect to all manufactures, 
should be governed would lead to the conclusion that three hun- 
dred and forty-six dollars represented not over ten months' work, 
and if then we added one-fifth of three hundred and forty-six 
dollars to make up for the two months, we reach a general aver- 
age, including the administrative force, of four hundred and fifteen 
dollars each, — again substantially corresponding with the conclu- 
sion of the writer." Again, speaking on the same subject, page 108, 
he says, " But this result must be subjected to very important 
qualifications. The list of occupations, listed under the term of 
manufactures, includes brick-making, which can only be followed 
six months in the year. . . . The wages of cotton manufacture 
appear to be only two hundred and forty-five dollars each, per 
year, by far the larger portion of those employed being women 
and children ; but in his (Mr. Weeks') judgment, this sum should 
be raised to at least two hundred and eighty dollars, and, includ- 
ing administrative force, to perhaps three hundred dollars a year, 
in order that it may be made to correspond to the full year's 
work of those who were continuously employed." 

Now, if the purpose were to ascertain average monthly wages, 
there would be ground for this statement. But, when we are 
endeavoring to ascertain the total amount of wages paid to the 
working-force of the country, the proj)Osal to add one-fifth to 
the amount actually paid, for the reason that workers were em- 
ployed but four-fifths of the time, could never be made except 



THE DISTRIBUTION OF WEALTH. 73 

by some one zealous to verify estimates which cannot be verified 
in a more rational manner. 

It is true that there are those who are employed but a part 
of the year in their special calling, who are employed in other 
industries during part of the year. But, if they engage in any 
of the industries reported, their labor and wages are counted. 
If they are employed at something else, what is it ? Most fre- 
quently in agriculture. The product of that industry is counted. 
They are not carpenters, nor blacksmiths, nor merchants ; what 
do they do, that Mr. Atkinson proposes to count full time and 
pay them at the rate of four hundred and fifteen dollars per year ? 

The truth is, as indicated, and as every person who looks about 
him knows, that the labor unemployed during the course of a 
year represents more than one-fifth of the entire labor power of 
the country. The product of the manufacturing industries could 
be doubled, without drawing from other industries, or from the 
common labor of the country, those who could not be spared. 

Capital, in its struggle to maintain its margin of profit, checks 
production and hinders distribution; and Mr. Atkinson feeds 
idle labor on a priori estimates of what might be if labor were 
employed the year round. 

The effect of the unequal and inequitable division of the 
product between capital and labor, in aggregating the wealth 
of the country, demands special consideration, which will be 
given in the following chapter on the Distribution of Wealth. 

THE WEALTH OE THE UNITED STATES. 

Forty-three billion dollars has been the generally accepted es- 
timate in round numbers of the total wealth of the United 
States in 1880. How this amount is arrived at appears from the 
following, which is given by Mr. Atkinson as the census valua- 
tion of the wealth of the United States in 1880. 

1. Farms |10,197,000,000 

2. Eesidence and "business real estate, including water-power . 9,881,000,000 

3. Eailroads and equipments 6,536,000,000 

4. Telegraphs, shipping, and canals 419,000,000 

5. Live-stock on and off farms, farming-tools, and machinery 2,406,000,000 

6. Household furniture, paintings, hooks, jewelry, household 

supplies of food, fuel, etc 6,000,000,000 

$33,439,000,000 



74 THE DISTRIBUTION OF WEALTH. 

Brought forward $33,439,000,000 

7. Mines, petroleum wells, quarries, and one-half the annual 

product thereof reckoned as the average supply in the 

hands of producers or dealers 781,000,000 

8. Three-quarters of the annual product of agriculture, 

manufactures, and annual importation of foreign 
goods, assumed to be the average supply in the hands 
of producers and dealers 6,160,000,000 

9. Churches, schools, asylums, public buildings of all kinds, 

and other real estate exempt from taxation 2,000,000,000 

10. Specie 610,000,000 

11. Miscellaneous items, including tools of mechanics . . . 650,000,000 

Total 143,640,000,000 

The statement that this is the census valuation is misleading. 
Several items are made up largely of estimates for which there 
is no reliable data. This is true of Items 2, 6, 9, and 11. Some 
of the estimates are evidently too high, and Item No. 8 is double 
what it should be. No. 3, railroads and equipments, is put 
down as the sum of the stock and indebtedness of railway com- 
panies. The net incomes of railways amounted to four per cent, 
on this valuation. Many railroads are mortgaged for fifty per 
cent, more than what would be the present cost of construction. 
The amount of earnings in excess of fixed charges was but 
$40,385,000, or five per cent, of $807,700,000. Adding this latter 
sum to the indebtedness, we have $3,620,000,000. But, estimated 
according to what would have been the cost in 1880, the valua- 
tion should not be more than $3,000,000,000. ^ 

Three-fourths of the products of agriculture and manufactures 
amount to but $3,140,000,000. Imported foreign goods ought 
not to be included, except the amount of the excess of value 
over exports, which is a small item. 

The total capital invested in mining (except precious metals), 
petroleum wells, quarries, and salt manufacture, and one-half the 
annual product amounts to but $523,000,000. 

Making the corrections here suggested, the statement would 
stand as follows : 

1. Farms 110,197,000,000 

2. Eesidence and business real estate, including water-power, 

machinery, etc 9,881,000,000 

$20,078,000,000 



THE DISTRIBUTION OF WEALTH. 75 

Brought forward . ' . |20,078,000,000 

3. Eailroads and equipments 3,000,000,000 

4. Telegraphs, shipping, and canals 419,000,000 

5. Live-stock on and off farms, farming-tools, and machinery 2,406,000,000 

6. Household furniture, paintings, books, etc 5,000,000,000 

7. Mines, petroleum wells, quarries, and one-half the an- 

nual product 525,000,000 

8. Three-quarters of the annual product of agriculture and 

manufactures 3,140,000,000 

9. Churches, schools, asylums, public buildings, and other 

real estate exempt from taxation 2,000,000,000 

10. Specie 610,000,000 

11. Miscellaneous items, including tools of mechanics . . . 650,000,000 

Total $87,828,000,000 

The total assessed valuation in 1880, including credits, was 
$16,902,993,543. The taxes assessed amounted to $312,750,721. 
A considerable amount of the property here enumerated is 
owned in foreign countries. Taking the fact into account, and 
allowing for over-estimate in Items 2, 5, and 11, I am of the 
opinion that the value of the property owned by the people of 
the United States in 1880 did not exceed $35,000,000,000. 

DISTRIBUTION OF WEALTH. 

In the collection of statistics hitherto, no effort has been 
directed towards ascertaining how the wealth of the nation is 
divided among individual owners. Statisticians have been con- 
tent with general averages, and an exhibition of the relative 
wealth of States and counties. When the census of 1880 was 
taken, the subject of the individual distribution of wealth had 
not yet forced itself upon the attention of legislators and of 
government officials in charge of that work. 

The doctrine that if property exists it is not a matter of 
pubhc concern who owns it has been often announced, but 
more frequently tacitly accepted by those who would not care 
to openly avow it. 

It is said, in behalf of the accumulation of wealth in great 
individual fortunes, that millionaires are but trustees holding 
title to property for the benefit of the people at large. And so 
doubtless in a romantic sort of way they sometimes regard 
themselves. 



76 THE DISTRIBUTION OF WEALTH. 

It would accord with the general principles of equity, were 
the immense acquisitions of some to be treated by the State 
as resulting trusts, properly subject to gradual distribution 
through the agency of graded income taxes and laws affecting 
the distribution of the estates of deceased persons. 

Mr. Thomas G. Shearman, in an article in the IN'ovember 
(1889) number of the Forum, enumerates by name a list of 
millionaires as follows, omitting names : 

2 owners of ^150,000,000 |300,000,000 

6 " 100,000,000 500,000,000 

1 " 70,000,000 70,000,000 

2 " 60,000,000 120,000,000 

6 '< 50,000,000 300,000,000 

6 " 40,000,000 240,000,000 

4 " 35,000,000 140,000,000 

13 " 30,000,000 390,000,000 

10 " 25,000,000 250,000,000 

4 " 22,500,000 90,000,000 

15 » 20,000,000 300,000,000 

68 '« 12,700,000,000 

Mr. Shearman gives the following exhibit from the Boston tax- 
list of 1888 : 

Individual Average 

Tax-Payers. Assessed Wealth. 

2 §4,600,000 

4 3,205,000 

3 2,732,570 

8 1,840,000 

39 930,000 

133 500,000 

1065 160,000 

Mr. Shearman assumes that an assessment of four hundred 
thousand dollars represents an estate of one million dollars, and 
that an assessment of seventy-five thousand dollars represents 
an estate of one hundred and fifty thousand dollars, making a 
difference in the ratio of assessments to total wealth between 
very large estates and comparatively small estates, for the 
reason that, where estates are very large, the chances for under- 
valuations and omissions are greater than in smaller estates. 
This view is in accord with general observation and experience. 



THE DISTRIBUTION OF WEALTH. 77 

From English statistics showing gradations of wealth, and 
from the foregoing figures, Mr. Shearman reaches a basis of 
classification, which, applied to the ascertained facts, gives, as a 
result, the following exhibit of the distribution of the wealth of 
the people of the United States. A population of sixty-five 
millions and a total wealth of sixty-one billion five hundred 
million dollars are assumed. I regard the amount of estimated 
wealth as somewhat too large; but, as affecting the question 
of distribution, it is not necessary to attempt more than an 
approximate estimate of the amount. The rule of general 
averages applied by Mr. Shearman will doubtless yield general 
results approximately correct ; but it can only be applied where 
large numbers are embraced. 

DISTRIBUTION IN CLASSES. 



No. of 


Total 


Average 


Families. 


Wealth. 


per Family. 


70 


2,625,000,000 


$37,500,000 


80 


1,025,000,000 


11,500,000 


180 


1,440,000,000 


8,000,000 


135 


968,000,000 


6,800,000 


360 


1,656,000,000 


4,600,000 


1,755 


4,036,000,000 


2,300,000 


6,000 


7,000,000,000 


1,250,000 


7,000 


4,550,000,000 


650,000 


11,000 


4,125,000,000 


375,000 


14,000 


3,220,000,000 


230,000 


16,500 


2,722,000,000 


165,000 


50,000 


5,000,000,000 


100,000 


75,000 


4,500,000,000 


60,000 


200,000 


4,000,000,000 


20,000 


1,000,000 


3,500,000,000 


3,500 


2,000,000 


4,000,000,000 


2,000 


9,620,000 


7,215,000,000 


800 



13,002,080 161,582,000,000 

From this table it will appear that seventy families own one- 
twenty -fifth, or four per cent, of the wealth of the nation ; eight 
hundred and forty-five families, or about one-fifteen-thousandth 
part of the population, own one-eighth of the total wealth, and 
less than one-fifteen-hundredth of the population own three- . 
sevenths of the total wealth, and one-thirty-fourth of the 
population own over seventy per cent, of the total wealth. 



78 THE DISTRIBUTION OF WEALTH. 

A high degree of accuracy for these figures, in detail, cannot 
be claimed ; but that the first half of the table approximates 
somewhat closely the actual distribution of wealth there is no 
reason to doubt. The distribution of wealth among farmers and 
in villages cannot be brought under the operation of the same 
rule, and is more equitable than is here shown. 

The following, from Mulhall's table of incomes of the British 
people for the year 1883, indicates the distribution of wealth in 
that kingdom : 

Class. No. of Families. Total Income. Average. 

Gentry 222,000 $1,665,000,000 $7500 

Middle 604,000 1,205,000,000 1991 

Trade 1,220,000 1,220,000,000 1000 

Working 4,629,000 2,235,000,000 482 

Total 6,675,000 $6,325,000,000 

One-thirtieth of the whole population absorb a little less than 
one-fourth the earnings of the British nation. The earnings of 
the gentry and middle classes are derived chiefly from rents, in- 
terest, and profits on invested capital. 

The incomes of the British people in 1877, as given by 
Mulhall, are as follows : 

Income. England. Scotland. Ireland. United Kingdom. 

No. No. No. No. 

Over $250,000 ... 71 15 4 90 > 

$50,000 to 250,000 ... 904 132 81 1,067 

5,000 to 50,000. . . 18,622 2,191 878 21,691 

750 to 5,000 . . . 275,733 27,642 14,478 317,848 



Over $750 295,830 29,980 15,886 840,696. 

A considerable portion of the revenues of G-reat B]*itain are 
obtained from income taxes, and statistics therefore furnish 
accurate information. 

The average value per inhabitant of houses in England, in 
1880, was $95 ; Scotland, $75, and in Ireland, $35. 

In the United Kingdom of England, Scotland, and Ireland, 
thirty-four persons own over one-eleventh of all the land. The 
total number of land-owners is 180,524, and the average number 
of acres to each holding is 390. In Ireland, the average holding 



THE DISTRIBUTION OF WEALTH. 79 

is 1120 acres; in Scotland, 2150; in England, 212. The number 
of holdings under fifty acres is, in England, 3500 ; Wales, 600 ; 
Scotland, 700 ; Ireland, 7800. The land of England comprises 
72,000,000 acres, one-fourth of which, not counting owners of 
less than one acre, is owned by 1200 proprietors, and half the 
entire United Kingdom is owned by 2512 persons out of a 
population of 35,000,000. * The peers, about 600 in number, 
own 14,000,000 acres, yielding an annual rental of $66,000,000. 
The Duke of Devonshire owns four estates, amounting to 
115,000 acres; the Duke of Bedford, 72,000; the Duke of Port- 
land, 61,000; the Duke of j^orthumberland, 181,000; "and in 
every county there are properties ranging from 10,000 to 30,000 
acres in the possession of the lords. Seven persons own one- 
seventh of Buckinghamshire, which has a population of 175,000." 
Five persons own one-ninth of the land in Cambridge, and six- 
teen persons own two-sevenths of the land in Cheshire, where 
there is a population of 561,000. 

" In Ireland the situation is similar. In the province of Mun- 
ster eleven persons own one-seventh of the land. In Ulster, a 
noble marquis, the grandson of G-eorge the Fourth's mistress, 
owns 122,300 acres ; the natural son of another marquis owns 
58,000 ; and still another marquis, married to a woman of the 
town now living, owns 34,000. In Connaught two persons own 
274,000 acres ; and, besides these, Yiscount Dillon holds 83,000, 
and the Earl of Lucan 60,000. Lord Fitzwilliam has an estate 
of 89,000 acres ; the Duke of Leinster one of 67,000 ; Lord 
Kenmare one of 91,000 and another of 22,000 ; Lord Bantry 
owns one of 69,000 ; Lord Lansdowne, one of 91,000, another 
of 13,000, and another of 9000 ; Lord Downshire, one of 26,000, 
one of 15,000, and another of 64,000 ; Lord Leitrim, three of 
54,000, 22,000, and 18,000, respectively. The Duke of Devon- 
shire, in addition to his enormous English properties, has one 
estate of 32,000 acres, and another of 27,000." 

In Scotland, " the county of Sutherland contains 1,290,253 
acres, of which the Duke of Sutherland owns 1,176,343. The 
population of the county is 24,317 souls. Six other potentates 
hold over 100,000 acres among them, leaving exactly 5295 acres 

* Bateman's Great Land-Owners. 



80 THE DISTRIBUTION OF WEALTH. 

for the rest of the remaining 24,310 inhabitants. There are, 
however, only eighty-five of these with more than an acre 
apiece. 

"Among the other great proprietors in Scotland are the 
Duchess of Sutherland, who owns an estate of 149,000 acres in 
her own right ; and the Earl of Fife, who has one of 140,000, 
another of 72,000, and another of 40,000. The Duke of Eich- 
mond has one of 155,000 and another of 69,000 ; the Earl of 
Seafield, one of 96,000, one of 48,000, and one of 16,000. The 
Earl of Breadalbane owns one of 193,000 and one of 179,000 ; 
the Duke of Hamilton, one of 102,000 and one of 45,000 ; the 
Duke of Buccleugh, three of 253,000, 104,000, and 60,000, re- 
spectively. The Duke of Argyle is comparatively poor; he 
owns only 168,000 acres. ... In Invernesshire, twenty men 
own 2,000,000 acres among them; and in Aberdeenshire, 
twenty-three lords and gentlemen own more than half the 
county, though the population is 244,000." * 

Five men own one-fourth of Scotland. One duke, with estates 
all over England, has 300,000 acres in Scotland. " This noble- 
man's park is fifteen miles in circumference. Another duke has 
estates which the highway divides for twenty-three miles. A 
marquis there is who can ride a hundred miles in a straight 
line on his own land. There is a duke who owns almost an 
entire county, stretching from sea to sea. An earl draws 
$1,000,000 every year from his estates in Lancashire. A duke 
regularly invests $400,000 a year in buying up lands adjoining 
his already enormous estates. A marquis enjoys $5,000,000 a 
year from land. An earl lately died leaving to his heirs 
$5,000,000, and $800,000 a year income from land. The income 
from land derived by one ducal family of England is $5,000,000, 
which is increasing from year to year by the falling in of 
leases. One hundred and fifty persons own half of England ; 
seventy-five persons own half of Scotland ; thirty persons own 
half of Ireland." f 

The average rental value of land in England (1880) is $7.70 
per acre ; in Scotland, $1.98 ; in Ireland, $2.45. The average 

* Adam Badeau, in English Aristocracy. 
f Quoted by Kuskin, in Tors Clavigera. 



THE DISTRIBUTION OF WEALTH. 81 

value of land in England was, in 1875, $210 per acre. The 
rental was a little under three per cent, on the value. ^ 

The capital of the people of Great Britain, invested in stocks, 
bonds, and mortgages, outside of loans and mortgages in Aus- 
tralia, Brazil, and other countries, amounts to $17,455,000,000, 
and yields an annual income of $776,500,000, an average of 4.4 
per cent. The capital embraced in this statement does not 
include lands or manufacturing industries. It is invested as 
follows : f 

Cat)ital Rate of Interest, 
^ ' per cent. 

National debt |3,845,000,000 3.0 

Eailways 3,850,000,000 4.0 

Banks 1,350,000,000 6.5 

Mines and iron 1,075,000,000 5.5 

Canals and docks 470,000,000 4.0 

Gas and water 360,000,000 8.0 

Telegraphs 150,000,000 5.7 

Insurance 100,000,000 6.0 

Shipping, etc 965,000,000 5.0 

British $12,165,000,000 4.4 

Colonial loans 740,000,000 5.0 

Indian loans 770,000,000 4,0 

Indian and colonial railways 930,000,000 5.4 

Foreign loans and railways 2,850,000,000 4.5 

$17,455,000,000 Zi 

Making, in 1883, a total interest-hearing capital of $17,455,000,000. 

Investments of capital in the United States, as shown by the 
census of 1880, are as follows : 

* In France there are 10,426,868 proprietors who own less than five acres 
each; 1,894,847 who own from five to 12.35 acres each; and 1,754,305 who 
own 12.35 acres each and over; seventy-five per cent, of the total number of 
landed proprietors possess but ten per cent, of the entire area ; thirteen per 
cent, of the proprietors own twelve per cent, of the area ; and twelve per cent, 
of the proprietors own seventy-seven per cent, of the entire area. There are 
proprietors owning two hundred and fifty thousand acres devoted to the 
pleasures of the chase. Nearly one-fourth of the land is occupied by renters. 
About one-third is cultivated by proprietors with the aid of hired labor; 
and about one-tenth is cultivated and owned by the peasants themselves. 

t Mulhall. 

6 



82 THE DISTKIBUTION OF WEALTH. 

Eailways '. $5,425,722,560 

Merchants' steam craft 112,005,600 

Sail-vessels 50,152,950 

Telegraphs 76,068,747 

Telephones 13,723,119 

Petroleum 27,325,746 

Salt 4,762,493 

Quarries 25,414,497 

Non-precious minerals 364,909,324 

Fisheries 37,955,349 

Manufacturing 2,790,272,606 

Insurance companies, fire 204,450,532 

" " life 442,272,471 

Loans of national banks 878,600,000 

Public debt of United States . 2,120,415,370 

State and municipal debt 1,117,585,546 

$13,691,536,910 

To this should be added estimates of private banks, savings 
banks, and mining precious metals. 

Loans of private banks and savings banks $1,000,000,000 

Mining gold and silver 400,000,000 

$1,400,000,000 
Other loans and credits $2,000,000,000 

The mortgage indebtedness of the people of the State of Illi- 
nois, in 1880, was $204,000,000. The wealth of the people of the 
State of Illinois was one-fourteenth part of the wealth of the 
nation. 

If the mortgage indebtedness of the people of other States 
were as great in proportion to wealth, the total mortgage in- 
debtedness of the people of the nation would be 12,856,000,000. 

A portion of these loans represents assets of insurance com- 
panies, and the total estimate of $2,856,000,000 would be doubt- 
less too great. The total amount, not including capital already 
enumerated, did not probably exceed $2,000,000,000, including 
private credits not secured by mortgage, other than bank 
loans. 

The value of business houses used in trade, and of houses 
rented for dwellings, offices, etc., was probably $4,000,000,000. 



THE DISTRIBUTION OF WEALTH. 83 

Capital employed in trade, street railways, gas-works, and water- 
works, was probably $4,000,000,000 more, making a total of 
revenue-bearing property (besides that invested in agriculture) 
of— in round numbers— $25,000,000,000. This exceeds the 
amount of capital represented by property employed in produc- 
tive industries. The excess grows out of the public debt and 
other credits which constitute a lien on the whole property and 
productive power of the people. 

Further illustration of the distribution of wealth is found in the 
statistics of 1880, with regard to United States registered bonds. 

Total amount of registered bonds $644,990,400 

" number of holders, 73,114 

Held in New York 210,264,250 

" Massachusetts 45,138,750 

" Pennsylvania 40,230,050 

" Ohio 16,445,050 

" District of Columbia 12,419,050 

" California 11,601,100 

" Illinois 9,118,950 

" Connecticut 8,894,400 

" New Jersey 8,104,150 

" Maryland 6,989,600 

« Ehode Island 4,717,100 

'< New Hampshire 4,658,100 

1378,580,550 

Other States 88,958,300 

" " insurance and trust companies . . . 227,451,550 

Four hundred and ten million dollars are held in sums of fifty 
thousand dollars and over. Fifteen hundred persons hold two- 
thirds of the whole amount. 

In the United States the growth of monopoly in land has not 
yet made great headway, except in the cities, where the law of 
" I got here first" is the foundation of many great fortunes. 
The following table shows the distribution of agricultural lands 
in the United States as exhibited by the census of 1880. 

Total number of farms 4,008,907 

" " " acres 536,081,835 

" improved land 284,771,042 

" unimproved land 251,310,793 



84 THE DISTRIBUTION OF WEALTH. 

Average number of acres of land in farms ..... 134 

" " " improved 71 

" ♦* " unimproved 63 

Number of farms cultivated by owners 2,984,306 

« " rented for money rent 822,357 

" " "for share of crops .... 702,244 

" " under 3 acres 4,352 

" " 3 to 10 acres 134,889 

" " 10 to 20 acres 254,749 

" " 20 to 50 acres 781,574 

" " 60 to 100 acres 1,032,810 

" " 100 to 500 acres 1,695,983 

" '' 500 to 1000 acres 75,972 

" " 1000 acres and over 28,578 

The increase of large farms from 1870 to 1880 shows a large 
per cent, of gain. 

HOMES OF WORKINGMEN. 

The Illinois Bureau of Labor Statistics has collected informa- 
tion showing the home and family relations of 47,287 workmen 
out of a total of 54,247 members of various labor organizations 
in the State of Illinois, in the year 1886. These statistics show 
that 23,764, or fifty-two per cent., are heads of families. The 
number who own homes is 6953, or twenty-eight per cent, of 
those who are heads of families. In Chicago the proportion of 
those who own homes is twenty-four per cent. ; in the State out- 
side of Chicago, the proportion is forty-two per cent. All having 
a proprietary interest in homes are included. The number of 
homes under mortgage does not appear. If all workingmen, in- 
cluding those not members of any labor organization, were in- 
cluded, these percentages would probably be somewhat lowered. 

WAGES IN MASSACHUSETTS. 

The report of the statistics of Massachusetts for the year 1888 
shows the following : 

The average annual earnings of the operatives in the manu- 
facturing establishments of Massachusetts for the year 1888 were 
$402.45 for each operative. In 1887 the average to each 
operative was $394.79. 



THE DISTEIBUTION OF WEALTH. 86 

The averages in the several industries are as follows : 

Agricultural implements 1516.59 

Arms and ammunition 551.91 

Artisans' tools 558.28 

Boots and shoes 503.41 

Boxes, paper and wooden 410.97 

Buttons and dress trimmings 277.78 

Carpetings 343.66 

Carriages and wagons 634.41 

Chemical preparations (compounded) 709.04 

Clocks and watches 687.02 

Clothing 406.76 

Cooking, lighting, and heating apparatus 789.11 

Cordage and twine 341.98 

Cotton goods 324.41 

Cotton, woollen, and other textiles 365.02 

Flax, hemp, and jute goods 276.31 

Food preparations 418.61 

Furniture 436.23 

Glass 416.77 

Hose, rubber, linen, etc 474.72 

Hosiery and knit goods 338.41 

Leather ' 512.87 

Linen 802.29 

Liquors, malt, distilled, and fermented 688.72 

Machines and machinery 535.22 

Metals and metallic goods 481.85 

Mixed textiles 352.10 

Musical instruments and materials 671.18 

Oils and illuminating fluids 600.00 

Paper and paper goods 407.46 

Print-works, dye-works 411.13 

Eailroad construction 413.12 

Kubber and elastic goods 552.32 

Ship-building 630.19 

Silk and silk goods 318.61 

Stone 541.68 

Straw and palm-leaf goods 388.21 

Tallow candles, soap, etc 451.72 

Wooden goods 485.87 

Woollen goods 351.98 

Worsted goods . 346.39 

Average |402.45 

The average wages in the industries named for the United 



86 



THE DISTEIBUTION OF WEALTH. 



States and for Massachusetts, during the census year, and for 
Massachusetts during the State census year of 1888, were : 



Industry. 
Agricultural implements 
Carriages and wagons 
Cotton goods . 
Food products 
Glass .... 
Mixed textiles 
Woollen goods 



United States for 
Census Year 1880. 


Massachusetts for 
Census Year 1880. 


Massacliuse 
1888. 


. . $385.07 


$376.05 


$516.57 




418.30 


481.29 


634.41 




245.93 


274.08 


324.41 




257.80 


422.84 


418.61 




. 378.29 


405.23 


416.77 




307.02 


337.22 


352.10 




. 298.51 


329.65 


351.98 



WAGES IN EUROPE AND AMERICA. 

The following tables are taken from Mulhall's "Dictionary 
of Statistics," published in London in 1883 : 

ARTISANS' WAGES IN 1880 — SHILLINGS PER WEEK. 
Great Britain. France. Belgium. Germany. Italy. New York. Chicago. 



Printer . . . 


. 32 


20 


19 


20 


16 


54 


62 


Painter . . 


. 32 


21 


18 


16 


19 


54 


38 


Plumber . . 


, 33 


23 


25 


15 


16 


62 


66 


Tailor . . '. 


. 25 


21 


17 


15 


18 


58 


50 


Shoemaker . 


. 31 


20 


14 


13 


18 


62 


56 


Carpenter . . 


. 33 


23 


23 


16 


17 


44. 


42 


Mason . . . 


. 35 


17 


25 


15 


15 


56 


33 


Smith . . . 


. 31 


23 


18 


15 


16 


50 


44 


Tinsmith . . 


. 28 


18 


20 


16 


15 


50 


44 


Baker . . . 


. 27 


23 


18 


16 


16 


. . 


42 


Collier . . . 


. 24 


15 


14 


16 


, , 


, , 


. , 



WAGES OP DAT-LABORERS IN AGRICULTURE IN 1880. 

England 30 pence = 60 cents. 

Scotland 18 

Ireland 28 

France 25 

Germany 18 

Kussia 12 

Austria 20 

Italy 10 

Holland 20 

Belgium '. . 20 

Scandinavia 14 



(( 


36 " 


<< 


56 " 


u 


50 " 


(( 


36 " 


(( 


24 " 


(( 


40 » 


(( 


20 " 


It 


40 " 


({ 


40 " 


(( 


28 « 



THE DISTRIBUTION OF WEALTH. 87 

The rise in agricultural wages between 1835 and 1880 was 

as follows :* 

Per cent. 

England 50 

Scotland 75 

Ireland 125 

France 66f 

Germany 125 

Eussia 100 

Austria 100 

Italy 150 

Holland 122 

Belgium 122 

Scandinavia . 86 

COTTON-MILL operatives' WAGES — SHILLINGS PER WEEK. 

England. United States. 

Sizers 36 40 

Weavers 30 35 

Pickers 15 28 

Strippers 17 28 

Cardboys 14 10 

Doifers 15 16 

"Warpers 15 16 

Winders 15 16 

WOOLLEN OPERATIVES — SHILLINGS PER WEEK. 

England. France. Belgium. Germany. United States. 

Sorter 24 22 lOf 5t 44 

Carder 24 llf 8t Sf 25 

Spinner 121 llf . . 12 26t 

Dresser 24 16 12 7t 54 

Weaver 30 24 18 12 35 

Fireman 26 19 15 . . 35 

Carpenter 33 27 15 . . 52 

Engineer 40 27 18 16 75 

* For the greater convenience of tlie reader, in statistics quoted from 
European authorities I have in many places substituted, in place of foreign 
denominations of money, their equivalents as stated in terms of American 
coin, counting the English pound as five dollars and the shilling as twenty- 
four cents. The exact equivalent of the British pound is twenty shillings 
sterling, equal in value to about four dollars and eighty-four cents. 

I Females. 



88 THE DISTRIBUTION OF WEALTH. 

RELATION BETWEEN WAGES AND FOOD — AVERAGE — SHILLINGS 
PER WEEK. 

(The reference is to wages of artisans.) 

It will be observed tbat, in tbe following table, the estimate 
of food consumed by the family of each worker in the United 
States is much greater than in Europe, although the cost of food 
is less, the food of the American working-man being of a different 
kind and quahty. 



•ood. 
14 


Surplus. 
19 


Rates of 
Surplus, 
per cent. 

55 


12 


10 


43 


10 


6 


38 


12 


8 


40 


9 


6 


40 


10 


6 


38 


16 


32 


67 


11 


29 


72 



Great Britain 31 

France 21 

Germany 16 

Belgium 20 

Italy • • 16 

Spain 16 

United States 48 

Australia 40 



WAGES IN GERMAN TEXTILE INDUSTRIES.* 

In textile industries over fifty per cent, of employes are 
women, receiving a weekly wage of from ten to twelve marks 
($2.50 to $3.00). 

WAGES PEK HOUR. 

Hand workmen 3f to 5 cents. 

Factory operatives 6 to 7J " 

Female workers 2J to 3J " 

Persons from fourteen to sixteen IJ to 2 " 

Children, twelve to fourteen J to 1 cent. 

In Berlin a skilful seamstress is supposed to earn from $2.25 
to $2.70 per week ; an inexperienced seamstress about half as 
much. Board of a sewing -girl about $2.30 per week. 

Mr. Tom Mann, president of the Dockers' Union, London, in 
the May number of the Nineteenth Century^ states that the chain- 
makers of Credly Heath, England, work for $2.40 or $2.88 per 
week ; that the lock-filers of Staffordshire get less still, and that 
thousands of laborers in Lancashire, in towns like Bolton, get 
no more than $3.60 per week ; that in towns like Ipswich, in 

1 ■ 

* American Consular Eeports, February, 1888. 



THE DISTRIBUTION OF WEALTH. 89 

the eastern counties, many are working for $2.64 and $2.88 
per week, out of which they have to pay eighty cents for rent 
and twenty-eight cents for coals ; and that before the great 
strike in London, thousands of dock-laborers considered them- 
selves fortunate if they averaged $1.92 a week. 

The United States Commissioner of Labor, in a statement 
laid before Congress, of recent date, gives the following com- 
parative statement of the average wages of certain classes of 
laborers in G-reat Britain and in the United States : 

Class of Employes. Great Britain. United States. 

Engineers, per day $1.46 $3.22 

Piremen " 91 1.79^ 

Conductors " 97 2.63 

Switclimeii " 85 1.50^ 

Magmen " 81 1.13 

Engineers' yearly earnings 457.00 1007.00 

Firemen's " " 285.00 562.00 

Conductors' " " 304.00 824.00 

Switchmen's '« " 266.00 471.00 

Flagmen's '* " 254.00 354.00 

The average weekly wages of potters are : 



United States .... $10.00 

England 5.20 

France 4.78 

Germany 3.60 



Austria $3.17 

Japan 2.50 

India 1.75 

China 1.50 



In China day-laborers are hired for ten cents per day, includ- 
ing meals. The average wages of a field-hand are twelve dollars 
per annum, with food, straw shoes, and free shaving. His clothing 
costs about four dollars. He may save eight dollars per annum. 
An acre of land is worth one hundred and fifty dollars. Ten 
years' savings will enable a young man to buy one-third of an 
acre and the necessary tools for farming. In twenty years he 
may save enough to purchase two-thirds of an acre, and in six 
years more enough to purchase a wife, with whose assistance he 
can maintain himself on his own land and consider himself in- 
dependent. 

Land in China is minutely subdivided, many holdings being as 
low as one-sixth of an acre. 



90 THE DISTEIBUTION OF WEALTH. 

The tenant pays the farmer one-half of the rice-crop. The 
crop on an acre is worth about thirty -nine dollars. 

A family of six persons will consume about six pounds of rice 
per day, worth about ten cents. A farmer pays two per cent, 
per month for what money he may borrow. * 

In Japan (1885) daily wages, without board, in agriculture, 
are 18.6 cents for men and 12.1 cents for women. The average 
monthly wages, with board, are $2.12 for men and $1.10 for 
women. Workmen employed in preparation of tea receive 25.8 
cents per day. Day-laborers receive twenty cents. Domestic 
wages for women are $1.06 per month, with board. 

I find in "Prisoners of Poverty Abroad," by Mrs. Helen 
Campbell, published in 1889, the following table of prices paid 
to working-women in London at the present time; the workers 
boarding themselves : 

" Making paper bags, four and one-half pence to five and one- 
half pence per thousand ; possible earnings, five shillings to nine 
shillings per week. Button-holes, three pence per dozen; 
possible earnings, eight shillings per week. 

" Shirts, two pence each, worker finding her own cotton ; can 
get six done between 6 a.m. and 11 p.m. 

"Sack-sewing, six pence for twenty-five; eight pence to one 
shilling six pence per hundred ; possible earnings, seven shillings 
per week. 

"Pill-box making, one shilling for thirty-six gross ; possible 
earnings, one shilling three pence per day. 

" Button-hole making, one penny per dozen ; can do three or 
four dozen between 5 a.m. and dark. 

" Whip-making, one shilling per dozen ; can do a dozen per 
day. 

" Trousers finishing, three pence to five pence each, finding 
own cotton ; can do four per day. 

" Shirt finishing, three pence to four pence per dozen." 

WAGES ONE HUNDRED TEARS AGO. 

On the Pennsylvania canals the diggers were paid six dollars 
per month from May to November, and five dollars per month 

* Consular Keports, September, 1887. 



THE DISTEIBUTION OF WEALTH. 91 

from I^ovember to May. Hod-carriers and mortar-mixers, dig- 
gers and choppers, who worked on the public buildings and 
cut the streets and avenues of Washington, from 1793 to 1800, 
received seventy dollars per year. The hours of work were 
from sunrise to sunset. Wages at Albauy, N, Y., and ;N"ew York 
City, were forty cents per day ; at Lancaster, Pa., eight to ten 
dollars per month; elsewhere in Pennsylvania, six dollars in 
summer and five dollars in winter. In Virginia white men 
received sixteen pounds currency per year. Slaves were hired 
at one pound per month. A pound, Virginia currency, was 
equivalent to three dollars and eighty-three cents. The average 
rate of wages all over the country was sixty-five dollars per 
year, with food, and sometimes lodging. 

WAGES AND PRICES IN THE THIRTEENTH CENTURY, AS ASCERTAINED 
BY THE INVESTIGATIONS OF PROFESSOR THOROLD ROGERS. 

Price for threshing was, for wheat, one-eighteenth part; bar- 
ley, one-twenty-second part ; oats, one-fourteenth part. In the 
eighteenth century the peasant got one-twenty-fourth part of 
wheat and barley, and one-twenty-first part of oats. The aver- 
age crop of the eighteenth century was more than double that 
of the thii'teenth century. 

Prices of reaping in thirteenth century were : Wheat, five 
pence per acre ; barley, five and one-half pence ; oats and rye, 
four and one-half pence; gathering beans, peas, and vetches, 
five pence per acre ; mowing hay, five pence per acre. 

Meat was one-fourth penny per pound. Clothing consisted of 
homespun russet cloth, hempen or linen shirting, rude boots, 
worth about two shillings, and leather gaskins worth one shill- 
ing and six pence. Amount required for the support of a farmer 
and small family is estimated at three pounds per year, and the 
ordinary savings of a small farmer at twenty shillings per year. 

Cai-penters' wages were from three pence to three and one- 
half pence per day ; in London, from four pence to five pence 
per day. 

At the building of Newgate gaol, in 1281, carpenters received 
four, five, and five and one-half pence per day ; masons, five 
pence; sawyers, nine and one-half pence per pair. Winter 



92 THE DISTEIBUTION OF WEALTH. 

wages were about twenty-five per cent, less than for other sea- 
sons. A day consisted of eight hours' labor. 

Board cost from one and one-fourth pence to one and one-half 
pence per day. 

Threshing was three pence for wheat, two pence for barley, 
one penny for oats, per quarter. 

Farm wages were two pence per day for men, one penny for 
women, one half-penny for boys. Wages per year, including 
harvest, two pounds fifteen shillings. 

Hands hired by the year received a quarter (eight bushels) 
of wheat, worth four shillings, every eight weeks ; six shillings 
in money during the year, and board in harvest and other ex- 
ceptional times. 

Domestic servants received thirteen to fourteen shillings and 
board per year. 

An advocate retained to defend a will received six shillings 
and eight pence ; and in another instance, noted by Mr. Eogers, 
a fee for conducting a case was six shillings and eight pence. 

Advocates and clerks, as a rule, were poorly paid. 

On account of the competition of manufacturing labor, wages 
were higher in the eastern counties. 

In 1333 the income of a lord was estimated at twenty per 
cent, on his capital. Parsons received two-fifths of the income 
of the lord on each estate. 

Weston Tower, Oxford, built in 1448-50, cost twenty-eight 
pounds eight shillings. It would now cost one thousand pounds. 

In the thirteenth century a penny contained three times as 
much silver as now. 

In 1260 money was worth twelve times as much as in 1760. 
And Eogers estimates that labor was better paid in the time of 
Henry III. than in the time of George III. 

NOTES FROM CENSUS OF MASSACHUSETTS, 1885 — MANUFACTURING 

INDUSTRIES. 

Number of wage-earners employed during the year ending 
June 30, 1885, 419,966; total wages, $147,415,316; net time 
actually lost by establishments, 6.10 per cent. Greatest number 
of persons who could be advantageously employed at any one 
time, with present buildings, machinery, and capital, 438,229; 



THE DISTRIBUTION OF WEALTH. 



93 



aggregate number of persons employed at the periods of greatest 
employment of the several industries, 301,159 ; smallest aggre- 
gate emjDloyment, 177,381 ; number of salaried persons, 9590 ; 
salaries, $10,846,367. Capital employed consists as follows : 
Land, $34,412,516; buildings, etc., $84,474,127; machinery, 
$100,955,619; implements and tools, $14,298,711; cash and 
credit capital, $173,440,947; credit capital furnished by part- 
ners or stockholders, $19,481,405; bills payable, accounts on 
long time, etc., $73,531,052 ; total capital, $500,594,377. 

PROPORTION OP PRODUCT TO CAPITAL. 

Per cent. 

1865. State census 291 

1870. United States census 239 

1875. State census 210 

1880. United States census 208 

1885. State census 135 

1885. State census, credit capital omitted 166 

COMPARISON OP WAGES FIFTY YEARS AGO AND AT THE PRESENT 
TIME IN ENGLAND (fROM " MISCELLANEOUS STATISTICS OF THE 
UNITED kingdom" AND PORTEr's "PROGRESS OF THE NATION"). 



Occupation. 


Place. 


Wages 
Fifty years ago, 


Wages 
Present Time, 


Increase, 
Per cent. 






Per Week. 


Per Week. 


Carpenters . . . . 


. Manchester. 


24s. 




34s. 




42 


(( 


. Glasgow. 


14s. 




26s. 




85 


Bricklayers . . 


. Manchester.* 


24s. 




36s. 




50 


u 


. . Glasgow. 


15s. 




27s. 




80 


Masons .... 


. Staffordshire. 


24s. 




29s. 


\M. 


24 


11 


. . Huddersfield. 


14s. 




23s.. 


M. 


69 


Miners .... 


u 


2s. 


8d.t 


4s.-j 




70 


Pattern weavers 


u 


16s. 




25s. 




55 


Wool scourers . 


ii 


17s. 




22s. 




30 


Mule spinners . 


11 


25s. 




30s. 




20 


Weavers .... 


11 


12s. 




26s. 




115 


Warpers and beam 


ers " 


17s. 




27s. 




58 


Winders and reel 


3rs " 


6s. 




lis. 




88 


Weavers (men) . 


. . Bradford. 


8s. 


M. 


20s. 


U. 


150 


Eeelers and warpi 


ng a 


7s. 


M. 


15s. 


U. 


100 


Spinning (children 


) . 


4s. 


M. 


lis. 


6d. 


IGO 



* 1825. 



t Per day. 



94 



THE DISTRIBUTION OF WEALTH. 



COMPARISON OF SEAMAn's MONEY WAGES PER MONTH (iN ENG- 
LAND) IN 1850 AND THE PRESENT TIME (fROM "PROGRESS OF 
MERCHANT SHIPPING RETURN"). 

1850, Present Time, Increase Rate, 

Sailing. Steam. Per cent. 

Bristol 45s. 75s. 66 

Glasgow 45s. 70s. 55 

Liverpool (1) 50s. 69s. bd. 33 

" (2) 50s. 85s. 70 

" (3) 45s. 60s. 38 

" (4) 40s. 60s. 25 

" (5) 42s. 60s. 40 

London (1) • 45s. 75s. 66 

'< (2) 50s. 77s. M. 65 

" (3) 45s. 65s. 45 

" (4) 45s. 70s. 55 

« (5) 40s. 67s. Qd. 69 

" (6) . 40s. 67s. U. 69 

PRICES OF VARIOUS ARTICLES FIFTY YEARS AGO AND NOW. 



Sugar (per cwt.) 



68s. M. 



uotton cioin, exj 


)orieu ^ 


jer yaruj . . . 


1840. 


Inferior beasts (per eight pounds) . . 


. . 3s. Id. 


Second class 




" . . 


. . 3s. Qd. 


Third class 




" . . 


. . 3s. llfc^. 


Inferior sheep 




" . . 


. . 3s. U. 


Second class 




" . . 


. . Zs.lQld. 


Large hogs 




" . . 


. . 3s. S^d. 



Present Time. 


21s 


9d. 




3id. 


1882. 


4s. 


SfeZ. 


4s. 


9id. 


5s. 


n\d. 


5s. 


u. 


6s. 


lid. 


4s. 


6d. 



The three foregoing tables are quoted from " Progress of the 
Working-Classes of the Last Half-Century," by Eobert Griffin, 
LL.D., president of the British Statistical Society. He esti- 
mates that the rental paid by workingmen is now two and one- 
half times what it was fifty years ago, and that houses have 
improved in corresponding ratio. The prices of wheat have 
ranged as follows : 



1836. The highest price was 

1838. " ♦' " " 

1839. " " " " 



per quarter. 



78s. 4d. 
81s. 6d. 



THE DISTEIBUTION OF WEALTH. 95 

1840. The highest price was 72s. 10^. per quarter. 



1841. " " " " 


. 76s. 


Id. 


1847. " " " " 


. 102s. 


6d. 


1837 to 1846. The average price was . 


. 68s. 


Id. 


1872 to 1882. " « " " . 


. 48s. 


9d. 


1862 to 1882. The highest price (1867) 


. 70s. 


5d. 



1862 to 1882. « " " (1868) . 74s. 7d. « 

Of late years the price has been both low and steady. During 
the earlier half of the century prices were subject to extreme 
fluctuations. Fifty years ago the English workingman con- 
sumed but little meat. Bacon only was within his reach, and 
not much of that. The same writer estimates the reduction in 
the hours of labor in textile, engineering, and building trades at 
twenty per cent. 

AGRICULTURAL WAGES IN ENGLAND. 

" On the whole, the agricultural laborer, at any rate in the 
south of England, was much better off in the middle of the 
eighteenth century than his descendants were in the middle of 
the nineteenth. At the latter date wages were actually lower 
in Suffolk, Essex, and perhaps part of Wilts, than they were at 
the former ; in Berks they were exactly the same ; in ]S"orfolk, 
Bucks, Gloucestershire, and South Wilts there had been a very 
trifling rise : with the exception of Sussex and Oxfordshire, 
there was no country south of the Trent in which they had 
risen more than one-fourth. Meanwhile, rent and most neces- 
saries, except bread, had increased enormously in cost, while 
most of the laborer's old privileges were lost, so that his real 
wages had actually diminished. But in the manufacturing dis- 
tricts of the north his condition had improved. While nominal 
wages in the south had risen, on the average, fourteen per cent., 
here they had risen, on the average, sixty-six per cent. In some 
districts the rise had been as great as two hundred per cent. In 
Arthur Young's time the agricultural wages of Lancashire 
were four shillings and six pence, the lowest rate in England ; 
in 1821 they had risen to fourteen shillings. It may be roughly 
said that the relative positions of the laborer north and south 
of Trent had been exactly reversed in the course of a century. 

" Turning from the agricultural wage-earners to those engaged 



96 THE DISTRIBUTION OF WEALTH. 

in manufactures, we find their condition at this period, on the 
whole, much inferior to what it is now. In spite of the widen- 
ing gulf between capitalist and laborer, the status of the artisan 
has distinctly improved since Adam Smith's time. His nominal 
wages have doubled or trebled. A carpenter then earned two 
shillings and six pence a day ; he now earns five shillings and 
six pence. A cotton-weaver then earned five shillings a week ; 
he now earns twenty shillings ; and so on. 

" If the wages have, on the whole, very greatly increased, 
there were, on the other hand, some obvious advantages which 
the artisan possessed in those days, but has since lost ; for the 
manufacturing population still lived, to a very great extent, in 
the country. The artisan often had his small piece of land, 
which supplied him with wholesome food and healthy recrea- 
tion. His wages and employment, too, were regular. He was 
not subject to the uncertainties, and knew nothing of the fearful 
sufferings, which his descendants were to endure from commer- 
cial fluctuations, especially before the introduction of free trade ; 
for the whole inner life of industry was, as we have seen, en- 
tirely different from what it now is. The relation between 
workmen and employers was much closer, so that in many in- 
dustries they were not two classes, but one. As among the 
agriculturalists, the farmer and laborer lived much the same 
life, — for the capitalist farniers as a class were not yet in exist- 
ence, and ate at the same board, — so in manufacturing industries 
the journejrman was often on his way to become a master. 
The distribution of wealth was, indeed, in all respects more 
equal. Landed property, though gradually being concentrated, 
was still in a far larger number of hands, and even the great 
landlords possessed nothing like their present riches. They had 
no vast mineral wealth nor rapidly-developing town property. 
A great number of the trading industries, too, were still in the 
hands of small capitalists. G-reat trades like the iron trade, re- 
quiring large capital, had hardly come into existence." * 

Another important fact not to be overlooked in this connec- 
tion, as bearing upon the relative amount of the actual earn- 
ings of labor, is that in the eighteenth century the production 

* Industrial Revolution of the Eighteenth Century in England. 



THE DISTRIBUTION OF WEALTH. 97 

of fabrics, clothing, and other articles in the family of the 
laborer was far greater than in the nineteenth century. 

On the other hand, the laborers of the nineteenth century 
enjoy many advantages in the way of public schools, postal 
service, and otherwise, which the eighteenth century did not 
afford. 

The industrial growth of England was attended by two 
notable changes in the condition of the people. The first was 
the consolidation of lands through the purchase and extinction 
of small holdings ; the second, the introduction of machinery. 
To these causes must be chiefly attributed the change in the 
condition of the laboring-classes, which is illustrated in the fact 
that the poor-rate gradually increased from three shillings and 
seven pence per head in 1760 to thirteen shillings and three 
pence per head in 1818, the highest rate ever reached. 

In 1831 there were 1,243,057 adult males employed in agri- 
culture in G-reat Britain ; in 1841 there were 1,207,989 ; in 1851 
the whole number of persons engaged in agriculture was 
2,084;i53; in 1861, 2,010,454; and in 1871, 1,657,138. 

MONEY, STATISTICS OF. 

The amount of gold and silver necessary for use as money, 
or for the purpose of facilitating exchange, is not an absolute 
quantity depending on the value of these metals according to 
present ratios of value, but a quantity sufficient to admit of 
division into pieces of sizes convenient for handling and numer- 
ous enough, when distributed among the people, to furnish 
measures of value in the number necessary to answer the 
purposes of convenience in conducting the business of exchange. 

The value of gold and silver depends upon the quantity in 
existence. If the present quantity of gold and silver in the 
world were only one-half what it actually is, the value would 
be twice as great, except for the fact that these metals are used 
in the arts ; and it may be, also, that the greater subdivision 
made necessary might extend somewhat the employment of 
credit, with these metals as a basis. But it may be laid down 
as a general proposition, that the value of the precious metals 
increases or diminishes in inverse ratio as the quantity increases 
or diminishes. 

7 



98 THE DISTRIBUTION OF WEALTH. 

The principal element that gives value to these metals is their 
scarcity and the fact that the amount on hand can be increased 
but slowly, so that the quantity, as compared with the volume 
of exchange, remains the same from one year to another, and 
the fluctuations in the ratio, through the course of a decade or 
a century, are confined within a narrow margin. 

JSTevertheless, the variation in the value of these metals 
through long periods of time has been very great; and the 
fluctuations within comparatively short periods have, in a few 
instances, been quite marked. It is estimated that between 
1800 and 1849 the purchasing power of gold, as measured in 
the ordinary necessities of life, increased about forty-five per 
cent., and between 1847 and 1858 the depreciation in the value 
of gold, resulting from greatly-increased production, was not 
less than twenty per cent. The increase in the product of silver 
within recent years has had a like efl'ect in depreciating the 
value of that metal. Except for the demonetization of silver 
in Europe and in the United States, the depression in value re- 
sulting from the increased production of that metal would have 
extended to gold as well, and the two metals would have re- 
tained their relative values as before. 

The relative depreciation in the value of silver is attributable 
altogether to demonetization of the latter metal. The effect of 
demonetization was, therefore, to increase the value of money, 
and, in like measure, to increase the amount of debts as meas- 
ured in thi^products of labor. 

From this demonetization of silver great advantage resulted 
to the holders of public securities and to private creditors hold- 
ing paper payable several years later, with corresponding loss 
to debtors and to the people who are taxed to pay public 
securities. 

The depreciation in tbe value of money resulting from in- 
creased production is a risk fairly assumed by the creditor. 
The depreciation in the values of other property, from whatever 
cause, is something which the government has never attempted 
to prevent, by increasing the amount of money in circulation, 
or by other special measure; and the favoritism shown to 
creditors is an injustice, for which there can be offered no valid 
excuse. But, under the plea of guarding the public credit, 



THE DISTRIBUTION OF WEALTH. 99 

Jegislation has often favored the creditor at the expense of 
the debtor. 

Prior to the eighteenth century the larger proportion of coin 
in use in England and America and throughout the world was 
silver. 

From 1200 to 1420 the amount of gold coined in Great Britain 
was £35,000, while the amount of silver coined was £183,000 ; 
from 1420 to 1603 the amount of gold coined was £1,494,000, 
and the amount of silver coined was £5,649,000 ; from 1604 to 
1688 the amount of gold coined was £13,432,000, and the amount 
of silver was £17,421,000 ; but from 1689 to 1760 the amount of 
gold coined was £26,058,000, and the amount of silver £8,239,- 
000 ; from 1760 to 1880 the amount of gold coined in Great 
Britain was £369,670,000, and the amount of silver was but 
£27,525,000. 

The coinage in the United States from 1793 to 1840 was, 
gold, £32,000,000, silver, £11,100,000 ; from 1840 to 1850, gold, 
£19,800,000, silver, £4,500,000 ; from 1850 to 1860, gold, £66,- 
000,000, silver, £9,300,000 ; from 1860 to 1881, gold, £147,200,- 
000, silver, £37,100,000. 

The following table shows the quantity of coin in the world 
since 1600, the amount of commerce and the ratio of coin to 
commerce (foreign). 

Date. Coin. Commerce. coin to^Co'mmerce. 

1600 £130,000,000 £35,000,000 371 

1700 297,000,000 94,000,000 316 

1809 380,000,000 286,000,000 133 

1830 313,000,000 368,000,000 85 

1880 1,128,000,000 2,650,000,000 42 



AMOUNT OP COIN IN DIFFERENT COUNTRIES, RATIO TO COMMERCE, 
AND AMOUNT PER INHABITANT. 

Year. Country. Gold. Silver. Total. mi^abiLnt. Commerce. 

1881. Great Britain . . £123,600,000 £19,300,000 £142,900,000 £4. 0.2 25 

1880. France 190,000,000 110,000,000 300,000.000 8. 0.2 90 

1880. United States . . 115,000,000 41,000,000 146,000,000 2.17.0 46 

The paper money of the United Kingdom was £42,000,000 ; 
that of France, £100,000,000 ; and that of the United States, 
£144,000,000. Amount of money per inhabitant of the United 



100 THE DISTRIBUTION OF WEALTH. 

Kingdom, £5.6.0; France, £10.10.0; United States, £5.15.0. 
The banking power of the United Kingdom was four times that 
of France. 

The extent to which credits, employed through the agency of 
banks, have taken the place of money is here illustrated. The 
amount of money per inhabitant in France is nearly double 
what it is in the United Kingdom, although the foreign com- 
merce of France is only three-fifths as great as that of the 
United Kingdom of England, Scotland, and Ireland. 

The amount of uncovered (by coin) paper money in 1880 was, 
in the United Kingdom, £10,000,000; France, £13,000,000; 
Germany, £20,000,000; Eussia, £88,000,000 ; United States, 
£81,000,000. 

At the close of the Franco-Prussian War, Germany exacted 
of France a thousand million dollars of gold indemnity ; and on 
the 9th of July, 1873, gold was, by law, made the standard 
of value in Germany. Before this the metallic currency of Ger- 
many was silver. Denmark, Norway, Sweden, and the Nether- 
lands, following the example of Germany, changed their cur- 
rency to gold and threw their silver on the market. Coinage 
was restricted in Italy, France, Belgium, Switzerland, and 
Greece, and soon thereafter ceased altogether ; and in 1873 the 
United States also ceased to coin silver, and made the gold 
dollar the sole unit of value. 

In England, prior to 1816, the unit of value, the English pound, 
was silver. In 1816 gold was made the unit of value, and silver 
ceased to be a legal tender in sums over forty shillings. 

From 1873 to 1878 there was no law authorizing the coinage 
of silver dollars in the United States. 

Prior to 1873 the silver dollar, of the same weight and fine- 
ness as now, was a full legal tender. 

The ratio in coinage between gold and silver was, in Europe, 
1.15J ; in the United States, 1.16. 

Prior to 1873 silver was at a premium. From 1873 to 1876 
the price of silver in the London market varied as much as 
thirty-five per cent., and on the 19th of May, 1887, it fell to 
eighty-three cents per ounce. 

During the four years ending June 30, 1865, the average value 
of the silver in a silver dollar is ofiiciallv stated as about three 



THE DISTRIBUTION OF WEALTH. 101 

and three-fourths per cent, greater than the value of the gold in 
a gold dollar. 

The amount of silver in our dollar is the same to-day as under 
the first coinage act of 1792 ; but the alloy has been changed, 
so that the dollar contains, since 1837, three and one-half grains 
less copper than before that time. 

In July, 1876, our silver dollar, as a commodity, was worth 
but seventy-nine and one-fourth cents; in 1884 it was worth 
eighty-six and one-fourth cents. 

From 1834 down to 1873, when silver coinage was stopped, 
silver, being at a premium, went abroad. 

Silver is the coin of most Eastern countries. 

The fall in the price of silver enabled England to purchase in 
India, with thirty- two cents, an amount of wheat that before the 
dej^reciation cost forty-eight cents. The effect was to stimulate 
imj^orts from India and reduce the demand for American wheat. 

The proportion of silver money to the amount of gold money 
in the world is as 9: 11 ; or, for every fifty-four cents in gold 
there are forty-six cents in silver. 

The amount of silver coined in the United States since 1878, 
and prior to 1889, is $308,780,157. 

The law enacted in 1878 authorized the Secretary of the 
Treasury to purchase silver bullion on the market, and provided 
for the coinage of an amount not exceeding four million dollars 
per month. 

In 1792, silver dollars of four hundred and sixteen grains 
were authorized. 

In 1793, Spanish milled dollars and parts of dollars were made 
a legal tender, and other foreign coins were made a legal tender 
until the expiration of three years after the establishment of the 
United States Mint. 

In 1806, foreign coins were made a legal tender at certain 
defined rates. Limitation in act of 1793 suspended three years. 

In 1834, foreign silver coins were made current at named rates. 

In 1837, silver dollars of four hundred and twelve and one- 
half grains were authorized. 

In 1851, three-cent pieces were authorized and made legal 
tender for amounts not exceeding thirty cents. They were 
three-fourths silver and one-fourth copper. 



102 THE DISTEIBUTION OF WEALTH. 

In 1853, half-dollars and other subsidiary coins were made 
legal tender to amounts not exceeding five dollars. 

In 1857 it was enacted that no foreign gold or silver coin 
should be a legal tender. 

The coinage act of 1873 authorized the deposit of silver bullion 
for the coinage of trade dollars of four hundred and twenty 
grains, and stamped bars, but no deposit was permitted for any 
other purpose. It provided for the purchase of silver bullion for 
coinage of fifty-cent, twenty-five-cent, and ten-cent pieces, and 
made silver coin a legal tender to the amount of five dollars.* 

The act of July, 1876, authorized the Secretary of the Treas- 
ury to issue the silver coin in the treasury in exchange for legal- 
tender notes to the amount of not exceeding ten million dollars, 
provided that trade dollars should not thereafter be a legal 
tender, and authorized the Secretary to limit the coinage 
thereof to the export demand. 

The act of 1878 made silver dollars of four hundred and twelve 
and one-half grains a legal tender, and authorized the Secretary 
of the Treasury to purchase silver bullion for coinage at a rate 
not exceeding four million dollars per month. It provided that 
silver should not be used in payment of gold certificates. • 

An act passed by the present Congress (1890) provides (1) 
that the Secretary of the Treasury shall from time to time pur- 
chase silver bullion to the aggregate of four million five hundred 
thousand ounces per month, or so much thereof as may be 
offered each month at the market price thereof at not exceeding 
one dollar for 371.25 grains of pure silver; (2) that payment for 
the bullion purchased shall be made in treasury notes, which are 
made a legal tender for all debts both public and private, ex- 
cept where otherwise ex]Dressly stipulated by contract, and are 
redeemable in gold or silver coin at the option of the Secretary 
of the Treasury, it being declared the policy of the United 
States to maintain gold and silver at a parity with each other 
in the ratio fixed by law ; (3) that the Secretary of the Treas- 

* The coinage of silver dollars had ceased prior to the repeal of the law 
authorizing their coinage in 1873, owing to the fact that silver was at a 
premium over gold. The higher value of silver was caused by the foreign 
demand. Silver was rated at a relatively higher value in the money of 
Europe, and was the standard coin in the East. 



THE DISTRIBUTION OF WEALTH. 103 

ury shall each month coin two million ounces of silver bullion 
into standard silver dollars until July 1, 1891, and after that 
time as much as may be necessary for the redemption of the 
treasury notes issued under this act; (4) the treasury notes 
provided for, after being redeemed, may be reissued, but the 
amount at any time outstanding is limited to the cost of the 
silver bullion purchased. 

The purchase of silver provided for by this act is sufficient to 
absorb the silver product of the United States at present avail- 
able for coinage. The value of silver is not forced to a parity 
with gold in the home market by an arbitrary act of govern- 
ment, but its value is raised to the extent of the effect of the 
increased demand. The treasury notes issued, being made re- 
deemable in gold or silver at the option of the Secretary of the 
Treasury, and being based on the gold value of silver, will 
naturally remain at a parity with gold. While an increase in 
the volume of currency, substantially equivalent to that which 
would have been obtained by free coinage, is thus secured, it is 
sought to avoid the effect of an attempt to maintain the circu- 
lation of coin at a higher relative value than that fixed by the 
markets of the world, which in the past has been exemplified in 
the hoarding and the exportation of the dearer metal. 

During the war which began in 1861 and ended in 1865, 
United States bonds were sold on the market to the amount of 
$1,163,769,611.89. Legal tender notes were received for the 
greater portion of this amount. On the third day of October, 
1865, the total debt of the United States was $2,808,549,437.75, 
embracing bonds, compound interest notes, treasury notes, cer- 
tificates of indebtedness, temporary loans. United States notes, 
and fractional currenc}^. This debt was contracted on the 
basis of the value of the paper currency. The total circula- 
tion at that date, embracing all securities used as money, was 
$1,894,779,825.66. 

The process of contracting the currency began during the 
year following the close of the war, and by July, 1870, the cir- 
culation had been reduced to $747,000,000. The consequent ap- 
preciation of credits and depreciation of property values resulted 
in the financial crash of 1873. 

The war was a source of great profit to capitalists. The losses 



104 



THE DISTRIBUTION OF WEALTH. 



have been borne by the workingmen. A financial policy may be 
altogether sound from the stand-point of the money-lender, and 
yet be but robbery disguised. 

The policy of the government in financial matters is dictated 
by the necessity of commanding the support of the money 
power, which is stronger than the people and always on the 
alert. The remedy will be found in that improved intelligence 
of the people which shall extricate the government from such 
necessity. 

The following table exhibits the amount of the outstanding 
currency of the United States and of national banks on Janu- 
ary 1 of each year, and the estimated amount of coin in circu- 
lation and in the treasury for the years designated. The first 
column. United States issues, embraces legal tender notes, old 
demand notes, and fractional currency. The amount of demand 
notes August 31, 1865, was $402,965. This amount was reduced 
each year. The amount of fractional currency in 1874 reached 
$48,544,792, the largest amount outstanding at any one time. 



Year. 

1865 . 

1866 . 

1867 . 

1868 . 

1869 . 

1870 . 

1871 . 

1872 . 

1873 . 

1874 . 

1875 . 

1876 . 

1877 . 

1878 . 

1879 . 

1880 . 

1881 . 

1882 . 
1683 . 

1884 , 

1885 . 



United States 
Issue. 

$459,201,619 

452,282,409 

409,230,614 

387,756,710 

390,343,813 

395,875,762 

396,096,175 

398,360,678 

404,364,355 

427,026,131 

428,462,917 

416,053,934 

392,468,752 

867,771,417 

362,851,210 

362,406,670 

362,265,225 

362,192,797 

362,138,319 



National Bank 
Issue. 

$176,213,955 

236,636,098 

298,588,419 

299,846,206 

299,747,569 

299,629,322 

306,307,672 

328,465,431 

344,582,812 

350,848,236 

354,128,250 

346,479,756 

321,595,606 

321,672,505 

323,791,674 

342,387,336 

344,355,203 

362,421,988 

361,882,791 



Coin. 



$40,000,000 



140,000,000 



398,541,683 

502,981,634* 

732,398,542* 

756,100,686* 

824,672,186* 

861,347,311* 

894,383,614* 



Total Currency. 
$635,415,574 
688,858,507 
707,819,033 
687,602,916 
690,091,382 
695,504,087 
702,403,847 
726,836,099 
748,947,167 
777,874,367 
782,591,165 
762,523,690 
714,064,358 
689,443,922 
686,642,884 
704,804,006 
706,620,428 
724,614,785 
724,021,110 



* November 1. 



THE DISTRIBUTION OF WEALTH. 105 

Since tlie above figures include amounts in the United States 
Treasury at the dates named, in order to ascertain the actual 
circulation the amount in the United States Treasury should be 
deducted. On October 1, 1883, the amount of bullion, coin, and 
currency in the treasury not represented by outstanding certi- 
ficates was $311,590,769, and on October 1, 1887, the amount in 
the treasury was $469,977,945. The money in the hands of the 
people, not including that in banks, was, on November 1, 1881, 
$918,048,519, and on November 1, 1885, $829,792,777. 

From the above table alone, it would appear that there had 
been no contraction of the circulation from 1865 to 1879, but, 
on the other hand, that there had been an increase. Besides 
United States legal tender notes there were issued, prior to 

1865, compound interest notes, one -year, and two-year notes of 
1863, and two-year coupon notes of 1863, all of which were a 
legal tender and intended to circulate as money. Of govern- 
ment legal tender currency there was outstanding, June 30, 

1866, $608,870,825. But, in addition, there were other issues, 
not designed to circulate as money, but which, owing to early 
maturity and the small denominations in which they were 
issued, were extensively used as currency. Of securities of this 
class, there were outstanding, September 1, 1865, as follows : 

Temporary loan certificates $107,148,713 

Certificates of indebtedness 85,093,000 

Three-year treasury notes 880,000,000 

State bank notes 78,867,575 

Total 11,101,109,288 

Securities of the classes here enumerated did not enter into 
circulation with the same freedom as the ordinary legal tender 
note ; nevertheless they were extensively employed as money, 
and tended greatly to the inflation of values. Counting these 
securities as money, the total circulation September 1, 1865, was 
$1,996,678,770. 

Prior to December 1, 1873, the securities here enumerated 
were cancelled, and in their place were issued long-time interest- 
bearing bonds; and on the Ist of December, 1873, the circu- 
lating medium, exclusive of coin, was as follows : 



106 THE DISTKIBUTION OF WEALTH. 

United States notes 1367,001,685 

Fractional currency 48,000,000 

Certificates of indebtedness (bearing interest) . . 678,000 

National bank currency 350,000,000 

Total December 1, 1873 1765,679,685 



Thus it appears that the amount of the evidences of indebted- 
ness of the United States government used as a circulating 
medium was contracted over $1,200,000 in eight years. Owing 
to the fact that many of these securities were held as invest- 
ments, and did not in fact circulate as money, the degree of 
contraction was much less than the amount measured, as here 
shown, by the reduction in volume. But, nevertheless, the 
contraction was sufficient to produce the panic of 1873 and the 
great depreciation in values of all classes of property which 
began with the reduction of the circulating medium, or as soon 
thereafter as financial pressure began to be seriously felt. 

When there is a contraction of the currency there is a ten- 
dency to supply its place by the employment of credit, and 
values for a time are maintained. When the pressure con- 
tinues, prices go down and credit is withdrawn, a financial crisis 
is brought on, and there comes a forced readjustment of values. 

The contraction in values of farm products resulting from the 
contraction of the currency is shown by a comparison of the 
amount and value of the cereals grown in 1867 and 1868, with 
the amount and value of cereals grown in 1880, 1881, and 1882. 

Year. No. of Busliels. Value. 

1867. 1,339,729,400 $1,284,037,300 

1868. 1,450,789,000 1,110,500,538 

1880. 2,718,193,501 1,361,497,704 

1881. 2,066,029,570 1,470,957,200 

1882. 2,829,319,089 1,280,765,927 

Agricultural exports in 1867 were $330,413,246, and in 1880, 
$823,846,353. 

The increase in population from 1867 to 1880 was about forty 
per cent. 

The great reduction in price of agricultural products must 
be attributed in part to the increase of the product per capita, 



THE DISTRIBUTION OF WEALTH. 107 

but it was to a great extent the result of the contraction of the 
currency. 

FLUCTUATIONS IN VALUES. 

The following tables show the annual production of wheat 
and corn in the United States during a period of twenty years. 
The value of each year's product is given, and the average farm 
price per bushel. The population also is shown, and the number 
of cattle and hogs at certain periods. The number of miles of 
railway built each year, the product of pig-iron and the prices 
thereof, the value of exports of meat and dairy products, bread- 
stuffs, wheat, and flour are exhibited. The gold value of cur- 
rency and the cotton product and prices, and the wheat- and 
rye-crops of the principal countries of Europe and the imports 
from India to Great Britain for a series of years are shown. 
The values of exports and imports are measured in gold. The 
statistics of cattle and hogs are given for December of the year 
designated, or for January of the following year, so that they 
represent the matured product of the corn-crop of the year 
designated. To ascertain the amount of the product of any 
year exported, reference must be made to the year following. 
The fiscal year ends June 30. 

The low prices which prevailed from 1874 to 1879 were the 
result of the panic of 1873 and the industrial depression which 
followed and continued until the business of the country had 
readjusted itself to the new conditions. The resumption of 
business activity is marked by the increase in miles of railway 
constructed and the production of pig-iron. During the first 
half of the decade beginning in 1880 prices advanced, but during 
the latter half the excess of the agricultural product broke 
down prices in that department of industry, so that the per 
capita product to each agricultural worker, after deducting seed 
and food of work-animals, is only eighty-two per cent, of the 
average per capita product for the years 1870 to 1874, inclusive, 
if we accept the value of the wheat and corn crops as a basis of 
estimate. 

While the reduction in the per capita product of agriculture 
was great, the indebtedness of the farmer had greatly increased. 
The immense amount of money borrowed by farmers and in- 
vested in agriculture resulted in an increase of the quantity of 



108 THE DISTRIBIJTIOl^ OF WEALTH. 

product ; but the effect was to reduce values, so that these in- 
vestments not only brought no returns to the farmer, but caused 
a reduction of the farmer's income while adding to his expen- 
diture. Besides, the fact must not be overlooked that the great 
increase of product was not distributed among the workers, 
being largely the result of extensive farming in the Western 
States and the cattle industry in the Territories, the per capita 
increase in quantity east of the Mississippi being but small * 

It will be observed that the fluctuations in prices of wheat 
depend in part upon conditions which control the European 
market. 

Europe requires, on an average, about 140,000,000 bushels of 
foreign grain; yet in 1881 there were 322,000,000 bushels to 
cover this demand, 186,000,000 bushels being from the United 
States alone. 

From 1876 to 1879 the crops of G-reat Britain were a succes- 
sion of failures, and Germany, Austria, Hungary, and other 
European countries had short crops in 1879. 

Prices of agricultural products in Europe have suffered from 
foreign competition to such degree as to greatly depress that 
industry and lead to general embarrassment. 

In England the price of hogs has fallen from forty-one cents 
per pound in 1868 to twenty-one and a half cents in 1888 ; the 
production of wool from 166,000,000 pounds in 1868 to 134,000,- 
000 in 1888 ; the area of grain culture is diminishing, and the 
rental value of lands has fallen to about one-half of former rates. 
Agricultural values throughout Europe have gone down as for- 
eign competition increased. 

The fluctuations in rail\vay construction, and in the manufac- 
ture of iron, exhibited in this table, indicate the large numbers 
of workers who are from time to time thrown out of employ- 
ment by the partial suspension of these industries, creating 
irregular and unhealthy competition in the labor market, re- 
ducing consumption and impairing values. 

* In 1889, Kansas alone produced one-nintli of the total product of wheat, 
oats, and corn; and the wheat-crop of Dakota increased from 2,800,000 
bushels in 1880 to 41,600,000 in 1889. In 1887 it was 62,500,000 bushels. 
The corn-crop of Kansas and Nebraska in 1889 was over 390,000,000 bushels, 
against 165,700,000 bushels in 1880. 



THE DISTEIBUTION OF WEALTH. 



109 



OOOOOOOOQOQOOOOOOOQOOOOOQOQOGOGOOOOOOOOOOO 

oooooooocoooooGoooQo^j"<r^i^i— j^j^a^j-<i^jca 












1^ 




1 












rti^COcOtO^CniOSOCDOxOOOiOiOOOiOCiiXJCrJCrxOT 


Population. 


m 

W 

o 

Q 


t-'G00l05C0CO0xt-'CO>-'CrtC0>^G0tO<:nC0<X) --OCDOi 
JO j<I _Oi pi J35 pi J-' j<I _rfi> j<I j^ JX Jn2 _CO JD JD ^tO JO J-' Jt>. J» 

"bo ~^ "h-* "^i. "►-' "en Id o "o ~I^ "oi 1o l:n "bo o ^H-' To "^ oo 

cocoOrf^^Jtoo:>lOi— 'cotot— 'Cfitoo5*>-^4fi— 'cooxio 
JO JD JJ5 j-^ J3i j» pi _pn J3i jfi. J-" J» J» j-4 JO p3 jf^ JO GO jyi jr> 


Bushels of 
Corn grown. 


i 


=€/5 

-a ^j o:>_0 en o GO oojo «Oj-^ i— ' O cnpjDj<rj:jxj»_OjD 
'co'cn't-i'wlr^i'^ o"bo"rf»''^~^"»-'"oi~hf»."*ht^ i— > i— ' to ^:rlD 

b0G0-aOC005G0-:r^c0-^OOi-'C0G0t0OO«0C0 
«OOOOOOOiOxOOCOOiOOOOOOOCnO 


Value. 


. . f 


Average price 
per bushel, 
local market. 


5 
g 

pi 


tOCOrfi.COCOO0>^a:>.O5COO3C0COWrfi-O5l^COrf».Crt-Jr 
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CntGOCONOi-'-JOi-'tOOirfi.t-«,-iCOh-'»-'tOcO-5GOi*». 
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_p 00 JO ^ JO pi Oi p» JD JO JW JO Jf^ Oi p JO Jf^ J<I JO JP»- J-* 


Bushels of 
Wheat grown. 


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C0*^l-'IS3IO05rfi^OQ0OO5rfi.cDOi00OCO00l-'O5«0 
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Value. 




^ CD bi OS ^ OS bi bo '»-' o o ^ o o o CO *►-' io io o CO 


Average price 

per bushel, 
local market. 





110 



THE DISTKIBUTION OF WEALTH. 



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* r^~r-^(^^cq~c^c^c4~(N"c<^co~Tl^TJ^^o"l^^■^"Ti^cD~ 


•^Ijnq iBAvirea JO senw 


OOC5iOOt-t-i-l<NOOiCDCOCOCOrHiOOOOOOO 
'^t^l^t^C55i-(i-l.-iQO(M'*t-05CO^CSOQOOO 
-<^OCOGOOT-Ht^l>'(McOlr~COt^»Ot^QOCOO O^O^ O^ 

(^^co'~^^^lOTi^(^4~^H~(^f(^^'■c^'^TJ^co~o^r-^cD~co^co~of 


•ani'BA gSbisav 


lO Oi CO Oi CD"^ O O^ CO GO CO O CO lO t^ . CO lO . Oi . 
lOrHC0OC0C000OC5T-IC^_t-0it-;»O ''J^C^l t^ 
Tj^CO'^'^-^OCOCOTjicO'^-^'OCOO -tIHtIH -lO • 


•sSoH JO laqraTiK 


ooo O coco coco (MO 

lO O • • • • • • • -O •0005 .CO"^ .OiCO 


c<io t--_ o_oo^ "^"^ '^'^ 

^5 . . . ..... .00 .i-O .rHC5 .OO 


CO^ «0, <NC^ "^"^ '^^^^ 


^^ ^ '^^ '^^ "SS 


•QUIBA oSBiaAV 


COT-li-ieDiOCO'*'0'*050C0050(M .t^ .cs^iS . 

CO 00 CO O i-H CD O >-; rH CO rH CO 00 CO O --; ^ '^. 
OC<ioiOOicd05I>^t^>OCDl>^oii-HCO -rH 'OSJ^- ' 
C^ (M r-l <M rH ,1 rH rH ,-( ,-1 ,-1 ,-H T-t (M (M <N rH tH 


18X110 am^o JO aaqum^ 


92,484 
12,200 

82,391 

46,077 
46,101 

75,242 

11,750 
32,417 
49,824 


t-i<M -^OO C^ u^<-^t^ 


;:::S ?i 'c^^ 'w "w^^ 


1 














t^O»— l(MCO-^lOCOt-00050rHC<)COTt(iOCOIr^OOC:: 

cotr-t-t-t-t-t-xr-t-t-t^cooocooooooooooococo 

COOOOOOOOOOOOOCOOOOOOOODCOCOOOQOCOCOOOOOCO 



THE DISTEIBUTION OF WEALTH. 



Ill 



OOQOGOQOGOQOGOOOOOOOOOOOOOGOQOGOQDGOOOQOOO 

ooQoooc»ooooooQocooo-<r-a-a-4^:i^i-j-j-a.<ra5 

«0Qp^^0iOTtf»-C0t0i-'O«OC0^I05Cnrfi.00t0i-iO-<l 

. O O O bO OS I-" CO -:r rfk. CO ts3 to O 00 00 00 Oi vti. 00 to 

^I ~J^ CO 05 SO CO rf»-~H-' O~co 1— '~to'^-*"^f!>.~Cn'tO^~^'b5 
. rf^-<rG0C00000C0>4i.ai.t0><^Ot0t0rfi.OOOi-'O 

J^J*^i^ J-* i*^i-^J*^i^i^i-' J^i^ J^J-'^J^ to CO o -a to 

• ~bi~cO~W~bo o'cd'k-J o"K-'lD^'rfi.1^"tO~^'^l3i'a»TN3~^ 

Oh-ih-icOOtO00i-'C0cOi-'i-'0^cnOi-'O0iC0--i 

• OxOH-'-acOtOOiCOtObOCOCi><i.Cnrfi.^aCOOiOOO 



Meats, Dairy Products, 
Cattle, Sheep, and 
Hogs exported. 



l-» fcO i-» to to bO H-i 

05 O 00 ^J OO I-' 00 
bO 00 to O QO O •-' ■ 



C5i 05 

00 Oi 
-4 to 



OOCOOxOCiCOOCOl— »O0i— 'h^i-i^JCnCOtOtO 

>fx^avfi.4i.-:rcococn^^OQOOi<:o*^oooooiOO 
Oi Pj*i.jDjOJOJ35pxj<ip5J-'JX) 00^ C3:> I— I O 00 

~^ ~bo "bt ~bi ~Qo ~bt ~bo ~^<i> l?x lo 00 ^^-i To ~H-' "co ~Go 
►-'Oxtoi— 'Cot0h*^-~jcn05cn)0x-aoocoo 
cnOOocooxOOH-'CiOiOTrfi.t-'co-acoffi. 



^ 



Bread-stuffs exported. 



M^ C35 O Ox 00 ~J O CD Ot en to ^:r *>. Oi CO h-i 

j:5^^h-'j<ijfi.jDpipxjoj:ojN3^tojDj:;^ ks^ en 

~rfi^"^'cD~^~ai'co'co^^lo~co"hP>."co"o "colo 

i-i 00 ~J en C7T rfs- 00 -^r 05 Ox en O to -a O rfi. 

^JO t— ' CO^JO Ox I—' en bo CO tfi. ox_CO tf^ O 

"H-l^so'colo^'o~bo~bo~^^i.'^"cD"co"b5"H-» "col» 

b005hP«.Oi--'i-'bOO^JCOC001l-ifcO OCO 

COl-'COCOrf».b000tO~^OxO5l-*l-'tO 05C0 



j-'j-'jX)jDj£)jr>j;s».j-ij3i ox^co^^ CO to 

• 'co'ox'H-i'bi'H-' to^~^'o~bi^~co"co ^~o 

cJ5i-'-4rfi.oxOcoov-*to-ii*i^co ox-^r 

■ ^i^J^_t*^J^5T^i~'J~'i^i*^i*J^ ■ • " • • CO oi 

. 'bi'h^i.TsS OO^tO^bl CO CO~M^~^ Ox~H-'"ot "co^rfi. 

. rfi>. CO I-' tfi. o o o o CO rf^ o o o t-" CO 



Bushels of Wheat ex- 
ported. 



Barrels of Flour ex- 
ported. 



OOOcOCDCOOOCOOOCOCOOO-a 

OOO-^coooooocoi-'OCocn 



Gold value of $100 in 
Currency on Jarjuary 
1 of each year. 



j<rj-JJ»_05 Ox OxJ35_Ox Oi OxJSxjP". ►^ii.j^COrfi.COtOrf^CObO 
"kJ "s-J "bx "bx ~bl '^ "cO "rfa- Ox ~^ ~0 "bo "vj^ l3i "» ~H- "c^ 
~JO5»-'OxC55l-'COCO00Ox-Ih-'00O5CO-JC0-:iOxOxi-' 
j-J _*< ^ _p JO Jfi- JO _Ox JO j<r ^ j-i jyx JO JO JD O _*>. Jn3 j^ JO 

"co CO cj^o^O o"bo"bo~bo~co^lo^To~co~M~bx~co~co~co"^ 

COrf^^tOl-'lOOxCOh^tsDCDCOOSbOOOCOOOOCTxi-'l^-J 
OOCOOxi-'fcOrfs>.OxCO-ai-iaxCOOOi-4QOOOi-'-<lOih4^ 



Bales of Cotton pro- 
duced. 



HJh^OO(-'i-''-'i-*»-'i-'i-'t-'H-it-»i-i|-itOtOH-itOCO 
OOcpcOOOi--'i-itO>-»Ot--ih-'tOOx~aOtOOiCOH-i 
b0t0t4^O0000Q0OxO0x00t000C0hP!>-C0i— ih- 'cOCOOx 
OOOOOxQOOOOlCOh-'^fi.bOtOOOOiOxrf^COOxOOCD 



Value of Cotton per 
pound. 



112 



THE DISTEIBTJTION OF WEALTH. 



WHEAT- AND RYE-CROPS OP THE PRINCIPAL COUNTRIES OE 



Year. 



1874. 
1875. 

1876 . 

1877 . 
1878. 
1879. 
1880. 

1881 . 

1882 . 

1883 . 



Wheat - crop 
of princi- 
pal coun- 
tries of Eu- 
rope, bush- 
els. 

931,414,000 

764,894,000 
766,943,000 
891,798,000 
894,455,000 
703,523,000 
810,900,000 
807,770,000 



EUROPE, ETC. 



Rye-crop of princi- Total Wheat- and 
pal countries of Rye-crops, bush- 
Europe, bushels. els. 



1,200,058,000 
982,050,000 
990,008,000 

1,128,000,000 

12,272,523,000 

954,025,000 

956,075,000 

994,919,000 



2,131,419,000 
1,746,944,000 
1,756,951,000 
2,019,798,000 
2,166,978,000 
1,657,548,000 
1,766,976,000 
1,802,690,000 



Imports of 
Wheat to 
Great Brit- 
ain from 
India.bush- 
els. 



8,097,123 

10,698,518 

1,597,273 

3,037,022 

8,964,168 

17,507,907 

12,273,632 



Year. 



Total wheat- crop of 
Europe, bushels. 

1880 1,128,000,000 

1881 1,160,000,000 

1882 1,283,000,000 

1883 1,553,000,000 

1884 1,270,000,000 

1885 1,183,000,000 

1886 1,108,000,000 

1887 1,245,000,000 



Total wheat-crop of the 
world, bushels. 

2,111,000,000 

2,025,000,000 

2,282,000,000 

2,054,000,000 

2,293,000,000 

2,095,000,000 

2,055,000,000 

2,188,000,000 



PRICES OP LEADING ARTICLES POR THE YEARS 1867, 1868, AND 
1870, COMPARED WITH PRICES OP 1884, AND OTHER YEARS, AS 
DESIGNATED, THE AVERAGE PRICES OP THE PORMER YEARS BEING 

REPRESENTED BY 100. 

1867-68 and '70. 1884. 

Cotton goods 100 56.3 

Coffee . .100 67 

Coal (anthracite) . . . \ 100 58 

Iron (bar) 100 48.3 

Iron (pig) 100 52 

Leather 100 70 

Sugar (refined) 100 70 

1884r-86. 

Mackerel 100 77 

Wool 100 100 

Kice 100 40.8 

Effffs 100 60 



THE DISTRIBUTION OF WEALTH. 113 

Butter 100 60 

Wheat 100 47.5 

Corn 100 56.4 

Mess pork 100 53 

Beef (salted) 100 70 

Hams 100 71 

1869. 1883. 

Freight charges, Chicago to New York . . . 100 46.6 

1867-75. 1885-89. 

Yield of wheat per acre 100 94.23 

" corn " 100 97 

1866-71. 1889. 

Beef cattle (New York) 100 67.7 



CHAPTEK lY. 



LIMITATIONS ON THE AMOUNT OF WEALTH — HOW THE VALUE OP 
LABOR IS DETERMINED — EFFECTS OF THE AGGREGATION OF 
WEALTH. 

The following chapter may be summarized as follows : 

The wealth of a country is divided into perishable property 
and durable property. 

Perish-able property consists of those products which are of 
such nature as to be susceptible of preservation during only a 
short period, and which must therefore be quickly consumed. 

Durable property consists of lands and other things possessing 
value which are not created by labor, and such products of 
labor as may be preserved in continued use from year to year. 

The distinction here drawn is not marked by a clearly-defined 
boundary, but it serves the purpose of a classification exhibit- 
ing certain differences in character of different kinds of property 
considered in this chapter. Only a small part of the products 
of labor can be preserved from year to year, and there are but 
few forms of wealth which may be handed down from one 
generation to another. The amount of wealth which can be 
saved or preserved constitutes but a small portion of the annual 
product of labor. 

The amount of perishable wealth which may be accumulated 

8 



114 THE DISTEIBUTION OF WEALTH. 

at any one time is determined by the demands of consumption, 
and, in proportion to population, varies but little from year to 
year. The quantity of durable property which may be created, 
and which may exist at any one time, is likewise limited by the 
demand for use. The demand for durable property for any 
given time and population is determined by the natural and 
acquired wants of the people, and is therefore dependent on the 
degree of civilization by which the habits and tastes of the 
people are determined. The demand is further limited by 
established economic conditions which regulate the distribution 
of wealth. The capacity to produce being greater than the 
demand is not, at least in this country, an operative limitation. 
The variation in the demand from year to year is within narrow 
limits. 

There are, therefore, limits upon the amount of wealth which 
a people, constituting a single industrial and social entity, may 
acquire, imposed, first, by natural laws; second, by economic 
conditions developed out of the growth of organized society, 
which restrain the productive pow^ of labor and control the 
distribution of its products. 

The savings of labor, during any given period, are represented 
by the total amount of the increase of durable property during 
that period. 

The aggregate of such increase is small, and whatever part is 
absorbed by the increased wealth of a few is deducted from the 
amount which would otherwise be distributed among the people. 

The value of property arises out of the demand for its use. 
The demand for property owned by one person for use by 
others arises out of the fact that those who desire it are them- 
selves without it. The wealth, therefore, of one individual, to 
the extent that it consists of property in excess of that moder- 
ate amount which he may himself use, implies a corresponding 
want of wealth in others. Grreat fortunes are possible only to 
the few. One man may own a fortune of one million only by 
virtue of the fact that one thousand men own nothing, or a much 
larger number own less than they use. 

The addition to the amount of durable property in any coun- 
try is subject to the limitation of the demand, which increases 
but slowly, and in a diminishing ratio as the stationary state of 



THE DISTKIBUTION OF WEALTH. 115 

wealth is approached; and as the i^ich grow richer, in more 
rapid ratio than the average increase of durable property, the 
poor grow poorer. 

Property, which is the right conferred by natural law and by 
the laws of society to the exclusive use, possession, and control 
of any article or thing, may exist in anything which can be 
made the subject of exclusive possession or control. 

The conditions which give value to property are, first, utility ; 
second, limitation of quantity. Nothing can possess value that 
is not useful, or of which the supply is without limit. 

Air possesses utility, yet it is without value, for the reason 
that the supply cannot be made subject to human control. 
Fish in the sea possess no value, but fish in a private pond have 
value. In the one case they are not under the control of any 
person, while in the other case they are. Water possesses 
utility, but is without value except under special conditions 
which limit the supply and make it a subject of individual 
control. 

In times of drouth, when it becomes necessary to transport 
water from one locality to another, water is reduced to possession 
and may acquire commercial value. In cities, where labor and 
capital are employed to convey water to the consumer, water 
acquires value. When water is conveyed through ditches for 
purposes of irrigation, it becomes property and acquires value. 

The word useful in this connection is not employed in the 
limited sense of what is good for man, but in the broader sense 
of being an object in demand for use. Whatever meets any 
human desire or want is useful in the sense of the word as here 
employed. The fact that the only uses to which an article may 
be put are immoral, or even criminal, is immaterial, except as 
modifying the degree of utility. That it is in demand for such 
purposes may give it value as property. 

It is quite evident that when the supply of an article is with- 
out limit, so as to be at the command of every person without 
exertion on his part, such article can possess no value, and can- 
not be made a subject of wealth. When the supply of a com- 
modity is in excess of what can be used, the excess, being 
without use, is also without value. 



116 THE DISTRIBUTION OF WEALTH. 

The value of an article may be reduced or destroyed by the 
smallness as well as by the excess of quantity. The quantity 
may be so limited as to prevent its use for purposes to which it 
might be applied if more abundant. 

Only such quantity of any commodity as can be used is useful; 
but many things not required for use at present, for the reason 
that the quantity is in excess of the demand, possess value be- 
cause of the demand which will arise in the future ; but the 
more distant the time when they will be called into use the less 
the value. 

The value of perishable articles such as food or clothing 
depends upon their being called into use within a short time. 
The value of clothing is subject to destruction not only by decay, 
but also by change of fashion. The products of iron may be 
longer preserved ; but even iron decays, and new devices destroy 
the value of old. 

The value of perishable articles deteriorates rapidly in pro- 
portion as the quantity on hand exceeds the present demand ; 
and the shorter the time within which they must be consumed 
the greater the reduction in value caused by an over-abundant 
supply. 

The interest value of capital reduces the value of property 
held only for future use. In estimating the value of an article 
which in ten years will be worth one hundred dollars, but which 
cannot be used in the mean time, we must take into account 
the cost of storage, insurance, and interest, and risk of loss by 
theft or other destructive agency. 

Any excess of the supply of articles produced by labor over 
the present demand must compete with the future product of 
labor, and therefore, in measuring the value of an excess of a 
product beyond the immediate demand, the probabilities of 
future production must be taken into account. 

As there can be no demand for a greater quantity of any prod- 
uct than can be used within a period limited by the conditions 
which we have mentioned, an excess beyond that quantity can 
possess no value. An excess creates an eager and unhealthy 
competition, which rapidly diminishes the value of the entire 
product. The point of highest value of the whole product is 
within the limit of the normal demand. 



THE DISTEIBUTION OF WEALTH. 117 

When the supply of any product is equal to the normal 
demand for consumption, the limit of wealth as to that product 
has been reached ; an excess not only does not add to the total 
value of the whole, but reduces the total value. 

To illustrate : When the potato crop is sufficient to meet the 
demand for consumption, an increase of the potato product 
cannot give additional value to the entire product, — cannot 
increase the wealth of the nation. Suppose, for instance, that 
the American people have capacity to consume, in one year, 
twenty million bushels of potatoes, and require no more, and 
that this quantity of potatoes is worth $8,000,000. 'Now add to 
this product of twenty million bushels, five million bushels more, 
and we have a total supply of twenty-five million bushels. This 
twenty -five million bushels would be worth less than $8,000,000 ; 
how much less depends upon conditions, the effect of which can 
be determined only by the measurement of actual results. The 
possible modifying effect of a foreign demand is not here con- 
sidered. 

The price of an article is rapidly advanced by competition 
between consumers, and rapidly diminished by competition 
among producers. The highest pecuniary value of a crop is 
reached at a point much below the amount of the total jDossible 
consumption. 

To illustrate : The amounts and total values of the corn, oat, 
and potato crops of the United States during a series of years, 
as reported by the Commissioners of Agriculture, are as follows : 



CORN. 

Year. Product in bushels. Value. 

1879 1,754,591,676 |694,618,304 

1880 1,717,434,543 679,714,490 

1881 1,194,916,000 759,482,170 

1882 1,617,025,100 783,867,175 

1883 1,566,000,000 658,700,000 

1884 1,795,528,432 640,735,560 

1885 1,936,176,000 635,674,630 

1886 1,665,441,000 610,311,000 

1887 1,456,131,000 646,106,770 

1888 1,987,790,000 677,561,380 

1889 2,112,892,000 597,918,129 



118 



THE DISTEIBUTION OF WEALTH. 



OATS. 

Year. Product in bushels. Value. 

1879 407,858,000 |146,829,240 

1882 488,250,610 182,978,022 

1883 571,302,400 188,529,792 

1884 583,628,000 161,528,470 

1885 629,400,000 179,631,860 

1886 624,134,000 186,137,930 

1887 659,618,000 - 200,699,790 

1888 701,735,000 195,424,240 

1889 751,515,000 171,781,008 

POTATOES. 

Year. Product in bushels. Value. 

1879 169,458,539 |81,848,474 

1882 170,972,508 95,304,844 

1883 208,164,425 87,849,991 

1884 190,642,000 75,524,290 

1885 175,029,000 78,153,403 

1886 163,000,000 73,350,000 

1887 134,000,000 91,120,000 

The total aggregate product, in bushels, of all cereals (corn, 
wheat, oats, rye, barley, and buckwheat), and the values of the 
same, as reported by the Department of Agriculture, are as 
follows : 

Year. Product in bushels. Value. 

1880 2,718,193,501 |1,361,497,704 

1881 2,066,029,570 1,470,957,200 

, 1882 2,699,394,496 1,468,693,393 

1883 2,829,319,089 1,280,765,927 



It will be observed that the value of the largest corn crop is 
less than that of the smallest ; that the value of the oat crop 
diminishes as the quantity increases, subject to the modification 
resulting from a diminished or increased corn crop ; while the 
small potato crop of 1887 is of greater value than the largest 
crop reported. The value of the potato crop depends much on 
how the crop is distributed ; and the same is true, but in a less 
degree, of the corn and oat crops. 

It will be observed that the total aggregate crop of cereals of 



THE DISTRIBUTION OF WEALTH. 119 

1881, the smallest of the four aggregates enumerated above, has 
the greatest value. The value of the crop of one year is affected 
by the amount of the crop remaining over from the year pre- 
vious, and the gradual increase of population causes a corre- 
sponding increase in the demand, while the development of the 
cattle industry in the Western Territories tends to reduce the 
prices of both corn and oats, grass-fed cattle taking the place 
of corn-fed animals ; but the operation of the principle stated 
very clearly appears. 

The following table shows the estimates of the Department of 
Agriculture of the average yield per acre, and the average price 
per bushel of corn and oats during a series of years. 

Corn. Oats. 

Year. 

1871 

1872 

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 

1881 

1882 24.5 48.2 24.5 48.5 

In 1881 the yield of corn was but 18.5 bushels per acre ; the 
value of the product per acre was $11.71. In 1879 the average 
yield was 29 bushels per acre; the value of the product per 
acre was $10.84. In 1882 the average yield of oats per acre, was 
24.5 bushels ; the value of the product per acre was $11.87. In 1878 
the average yield of oats per acre was 31.5 bushels ; the value 
of the product per acre was $7.75. In 1874 the yield of both 
the oat and corn crops was small ; and the average value of the 
corn crop per acre was $13.41, and that of the oat crop $11.44. 

The value of the oat crop depends upon the quantity of corn 
grown the same year and the year previous. 

The variation in the area of crops grown, which is not here 
taken into account, affects the price, so as to somewhat vary the 



Yield. 


Price. 


Yield. 


Price. 


29 


48.2 


30.5 


40 


30.8 


39.6 


30 


35.5 


24.3 


48 


28 


37 


20.8 


64.5 


22 


52 


29.3 


42 


29.5 


36 


26 


37 


24 


35 


26.5 


35.6 


31.8 


29 


27 


31.7 


31.5 


24.6 


29 


37.4 


28.6 


33 


27.5 


39.6 


25.8 


36 


18 5 


63.3 


24.8 


46.5 



120 THE DISTEIBUTION OF WEALTH. 

ratio between the yield per acre and tlie price. But the fact 
that as the product increases the value diminishes is clearly- 
illustrated. 

During the last eight years the value of corn, in many locali- 
ties, has varied as much as one hundred per cent, from the 
lowest, or fifty per cent, from the highest price. The value of 
the total annual product has varied as much as twenty per cent, 
from the highest price. 

What is here shown as to corn, oats, and potatoes is true also 
of the meat product. Where hogs were sold, in 1888, at five 
dollars per hundred to the shipper, at the same date in the year 
1889 they were selling for three dollars per hundred. 

About thirty per cent, of our wheat is exported, and the value 
of this crop is therefore subject to the variations occasioned by 
fluctuations in the amount of the total product competing in the 
same market. 

It will be seen that our agricultural product, most of the 
time, has been in excess of that amount which would be of 
greatest value to the producer, and beyond which the returns 
for agricultural products cannot be increased. 

Our farmers diminish their incomes as they increase their 
crops. Wet seasons, drouths, and early frosts have been to the 
farmers blessings in disguise ; and the Hessian fly, the chinch- 
bug, and the potato-bug have been the farmers' loyal friends. 
The only cause for complaint lies in the fact that they have 
localized their operations in such manner that the general gain 
has been at the expense of the people of particular localities. 
Our manufacturers, who do not enjoy these natural advantages, 
have found a substitute in suspensions and lock-outs. 

The fluctuations in the price of potatoes are greater than the 
fluctuations in the price of corn or wheat, generally and locally, 
not only because of the greater variation in the amount of the 
annual product, but for the further reason that the surplus, not 
needed for immediate consumption, cannot be carried over to 
another year. 

What is true as here shown of potatoes is true of every other 
agricultural product, and also of every manufactured product. 
It is true of woollen fabrics, hardware, machinery, houses, mills, 
telegraphs, and railways. One railroad more than enough is 



THE DISTEIBUTION OF WEAXTH. 121 

one railroad too many, and adds nothing to the total value of 
the railway property of the whole country. When the people 
are supplied with houses in sufficient number, that satisfy their 
wants and gratify their tastes, more houses can add nothing to 
the total value of the whole. An excess beyond the demand is 
superfluous. When the market is glutted with houses to rent 
and houses to sell, rents and prices go down ; and, as the excess 
increases, prices fall in accelerated ratio. 

Grold and silver are valuable chiefly as measures of value in 
commerce. Their usefulness in the form of money, and their 
value for every purpose, depends upon the limitation of the 
supply. An increase in the quantity of gold and silver over the 
present supply could not add to the total value of the product. 
An increase in the amount would lead to the use of a greater 
quantity in the arts ; but the increased consumption would be 
the eifect of lower values. An increase in the coinage of gold 
and silver reduces the value of money in the ratio of the increase 
in the volume of coin. If gold were as abundant as iron, it 
would lose its value as a medium of exchange, and its then 
value would be such as it might possess for uses to which it is 
not now applied. 

Since, then, nothing except that which is useful can possess 
value, and only a limited amount of each species of property 
may be used, only a certain amount of wealth can exist in each 
of the several products of labor. The aggregate possible wealth 
of a people being the sum of a certain number of limited quan- 
tities, is itself limited. The people of a nation can create so 
much property and no more. When the supply is equal to the 
demand the limit of a nation's wealth has been reached, except 
as that demand may be increased. 

The demand has its limitations in the number and in the 
natural and acquired habits and tastes of the people. While, 
therefore, the demand is not stationary, but progressive, not 
unvarying, but elastic, its temporary variations are within 
narrow limits, and its permanent growth, though steady, is not 
rapid.* 

* It must have been seen, more or less distinctly, by political economists, 
that the increase of wealth is not boundless ; that at the end of what they 



122 THE DISTEIBUTION OF WEALTH. 

For the purpose of illustration, let us assume that, measured 
in dollars of the present value, the limit of wealth which can 
exist in this country at the present time, with its present popu- 
lation and under present conditions as to education and culture 
of the people, is $70,000,000,000. Let us then assume, further, 
that one-half of this amount is aggregated wealth, owned by- 
one class of people and used by others, property bringing 
revenue to the owners in the shape of interest, rents, profits on 
capital invested in trade, railways, manufacturing establish- 
ments, etc. Let us further assume that one-half of this aggre- 
gated wealth — that is, $35,000,000,000 — ^is amassed in fortunes 
varying from $100,000 to $200,000,000. It follows that the 
great body of the people own less property than they use. If 
the entire amount were divided among the whole people, allow- 
ing to each one the amount required for his own use, that 
amount being dependent upon the education, tastes, and habits 
of each individual, no one person could be the owner of a great 
amount of property. Interest, rents, and profits would be 
abolished if such conditions were established and could be main- 
tained. 

Supposing the distribution of property to be as assumed. 
When the people who possess little or no property seek to 
acquire it, they are confronted with the fact that there is a 
limit to the total amount of the wealth of a nation, and that 

term the progressive state lies the stationary state ; that all progress in wealth 
is hut a postponement of this, and that each step in advance is an approach 
to it, "We have now been led to recognize tliat this ultimate goal is at all 
times near enough to he fully in view ; that we are always on the verge of it, 
and that if we have not reached it long ago it is hecause the goal itself flies 
hefore us. The richest and most prosperous countries would very soon attain 
the stationary state if no further improvements were made in the productive 
arts, and if there were a suspension of the overflow of capital from those 
countries into the uncultivated or ill-cultivated regions of the earth. 

" The impossibility of ultimately avoiding the stationary state — this irre- 
sistible necessity that the stream of human industry should finally spread 
itself out into an apparently stagnant sea — must have been to the political 
economists of the last two generations an unpleasing and discouraging pros- 
pect ; for the tone and tendency of their speculations goes completely to 
identify all that is economically desirable with the progressive state, and with 
that alone." — John Stuart Mill. 



THE DISTRIBUTION OF WEALTH. 123 

one-half of that possible total amount is already in the hands 
of a comparatively small number. They cannot create new 
wealth because the limit of wealth has been already reached. 
If they seek a larger share of that which already exists, they 
are confronted with the fact that those who are in possession 
carefully guard and preserve it, while they derive revenue from 
its use by others. 

But it may be said that, notwithstanding there are enough 
dwellings to supply the whole people, those who do not own 
houses may build new ones for themselves. True, but by so 
doing they do not add to the total value of the houses in the 
country ; they do not increase the amount of the nation's 
wealth. The effect is a distribution of property ; one more 
owner has been added. By this method A, B, and C may 
force a division of the aggregate wealth of the nation. But 
what, if any, are the obstacles in the way ? Let us see. A 
seeks to build a house worth one thousand dollars. He does not 
possess the one thousand dollars. He must therefore acquire 
it from those who have it. Those who own the property of 
the nation, through the reveniles derived from its use, absorb 
the country's increase of wealth, and the aggregation of wealth 
continues in increased ratio. A must therefore obtain one 
thousand dollars of the aggregated wealth of the country, or 
one thousand dollars of property now belonging to others. 
He must do this through the medium of wages or of prices 
received for the product of his labor. He must exchange 
his labor, or the product thereof, with the capitalist for that 
one thousand dollars. His labor competes in the same market 
with the labor of others equally needy, who sell their labor 
for what they require to eat, drink, and wear, and pay the 
rents of the houses they live in. If A does better than the 
average, it is by habits of harsh economy to which he is little 
accustomed. The saving of one thousand dollars cannot be 
accomplished without years of patient self-denial. Sickness, 
misfortune, or want of employment may come at any time and 
waste his little store of savings. The chances are against him. 
His savings, in the first instance, must take the form of money. 
In order that A may save a dollar, B, C, and D must, at the 
same time, expend a dollar. Saving in the form of money 



124 THE DISTRIBUTION OF WEALTH. 

means suspended consumption. Suspended consumption means 
a reduction in the demand for labor. 

The more A saves the more difficult it is for others to save. 
Saving and spending are correlative acts. The amount of money 
in use is not sufficient, and in its nature cannot be sufficient, to 
enable a large number of people to store wealth in the form of 
money at the same time. 

Every worker is therefore dependent upon conditions which 
restrict his power to save. In his attempt to do so he enters 
into competition with every other person who is endeavoring to 
save. Among them they strive each for a share of a limited 
quantity. Thus the working-people, in their eiforts to accumu- 
late property, are forced into destructive competition, while 
capital, in the form of credits or of revenue-bearing property, 
exacts its tribute of interest, rent, or profits on the product of 
labor, and draws to itself, in accelerated ratio as its volume 
increases, the property of the nation. 

There may be said to be two principal reasons why the poor 
remain poor. The first is that the products of labor are absorbed 
by the profits of capital, and the money tribute which labor is 
compelled to pay to aggregated wealth prevents those small ac- 
cumulations of money which, during the period intervening 
between the time of earning and the time of investing, must 
represent the savings of the working-people. The second reason 
is the great aggregate amount of unemployed labor. 

As to the first. A possesses a fortune of a hundred millions. 
How did he acquire it? Assuming that labor is worth one 
dollar and fifty cents per day, that one hundred million dollars 
represents 66,666,666 days' labor, or four days' labor for each 
able-bodied man in the United States. What consideration did 
A give for all this wealth ? Shrewdness and cunning in manip- 
ulating markets, skill in operations on the board of trade. He 
schemed for it, he played with loaded dice, and won. 

As to the second reason. Labor under joresent conditions is 
unable to employ itself; it is unable to combine its power; with- 
out the aid of accumulated capital it can build neither mills nor 
houses ; and when capital owns houses and mills enough to satisfy 
the demand, all that it can profitably use or rent, it has no 
interest in producing more. 



THE DISTEIBUTION OF WEALTH. 125 

The productive capacity of labor may be sucb that one-half 
or two-thirds of the productive power of the 'people is fully 
adequate to meet the demands of consumption. But the labor 
of the individual worker can be utilized only in combination with 
that of others. One worker is but a fractional part of the great 
industrial unit which combines in a relation of complicated 
interdependence not only many workers, but many industries, 
and, in a measure, the whole people of one country or of many 
countries who exchange in the same market the products of 
labor. The individual worker, therefore, can create wealth 
only by working in conjunction with the industrial and com- 
mercial forces of the community of which he forms a part. As 
a producer of wealth he is dependent on the co-operation of 
others, and from this dependence there is no escape. Produc- 
tion is limited by consumption. The production, distribution, 
and consumption of products are relative and dependent parts 
of an industrial unit. When production is restricted, consump- 
tion is likewise limited ; when consumption is reduced, produc- 
tion falls off in corresponding measure; when distribution is 
hindered, production and consumption both suffer diminution. 

Production and distribution are effected through the use of 
money, and the financial system of a people is brought in as a 
factor in every industrial or commercial operation, — a factor 
which, more than any other, is subject to the control of indi- 
viduals or combinations of individuals. 

The total savings of a people are represented by the amount 
of durable property created and used and the supply of perish- 
able commodities on hand. Ninety per cent, of the products of 
industry are consumed as they are produced. The margin of 
savings is necessarily small ; and to secure a part of this re- 
mainder, the worker competes with capital, and, where capital 
is centralized in great fortunes, always at a disadvantage. 

The amount of interest, rent, or profit earned by capital in 
excess of the amount consumed by the owners of capital neces- 
sarily takes the form of durable property, or of credits, and 
absorbs the annual savings of the people. 

Hitherto prices of labor have been sustained and increased by 
reason of the unprecedented growth of the permanent wealth 
of the country, — the construction of railways, factories, mills, 



126 THE DISTKIBUTION OF WEALTH. 

dwellings, and every other species of durable property, — and 
because of the' demand of the working-classes for better food 
and clothing. But the margin of savings has not increased in 
equal ratio. We have been rapidly moving towards the end, — 
that point in development where the supply of permanent prop- 
erty begins to overreach the demand and labor is deprived of its 
margin of savings. 

Since wealth can exist only in the form of durable property 
and the necessary supply of perishable commodities for present 
use, the total savings of a people during a period of five years 
are represented by the amount of the aggregate increase of the 
permanent or durable property of the whole country during that 
period. "When, at any given time, there are already enough 
railways, factories, furnaces, mills, tools, and other durable prop- 
erty to satisfy the existing demand, the growth of wealth during 
the ensuing year must be limited to the amount of the increase 
of the demand during that year. This amount will represent 
the aggregate amount of the possible savings of the whole peo- 
ple during that period. Dividing that amount, so ascertained, 
by the number of the population of the country, we have the 
average possible savings for each person. 

The total increase of wealth in the United States during the 
period from 1870 to 1880, as shown by census estimates, was 
$13,573,881,493. In 1870 the wealth per capita of the people 
of the United States was $780. The increase in population from 
1870 to 1880 was 11,587,412. Allowing to this increased popula- 
tion the same per capita wealth, we have $780 X 11,587,412 = 
$9,038,181,360, which must be subtracted from $13,573,881,493, 
the aggregate increase, leaving a remainder of $4,535,300,133, 
which represents the total of the per capita increase of wealth 
during that decade; an increase of ninety dollars per capita 
in ten years, or nine dollars per year. 

The total wealth of the United States in 1870 and in 1880 
was much less than the amounts given out as estimates of the 
census bureau, but for the present we will accept these estimates 
as near approximations of the wealth of the country at these 
respective dates. 

We will now inquire how this increased wealth was distrib- 
uted. 



THE DISTKIBUTION OF WEALTH. 127 

During this period the capital invested in the leading manu- 
facturing industries and in railways was increased in the amount 
of $4,626,550,502, ninety millions more than the total amount of 
the per capita increase of the wealth of the nation. And, if we 
take into account the excessive valuation in 1870, this increase 
was much greater. Nearly the entire amount of the increase of 
capital invested in manufacturing and railways may be set down 
as so much added to the aggregated wealth of the country ; in 
other words, to fortunes already large. This is all revenue- 
bearing property. After deducting the increased aggregation 
in manufacturing and railway capital, there is left no margin 
of savings for distribution. 

We must also take into account the wealth which was 
invested in telegraphs, telephones, street railways, commerce, 
banks, mortgage loans, and palatial dwellings, as well as the 
aggregation of landed property. Could we ascertain the total 
increase of property in the hands of those holding more than 
the per capita amount of 1870, we would no doubt find that the 
amount owned by the remaining classes had greatly diminished. 

•To this, the answer readily suggested will be, that the in- 
creased amount of capital invested in manufacturing and in 
railways — that in railways alone being $4,080,950,502 — was, in 
the main, withdrawn from other investments ; that capital 
which had already been aggregated was absorbed in the creation 
of this new property, which therefore only represents old capi- 
tal in a new form. But from what sources was it drawn ? In 
1880 the entire credits of the country, not including the bonds 
which represented the new railway property, had increased in 
proportion to the population, rather than diminished. The 
aggregations of real estate had also greatly increased, and every 
species of aggregated wealth had kept full pace with the in- 
crease of population. And, while it is necessarily true that 
part of the money invested in railway construction is with- 
drawn from some other form of investment, and to an amount 
near the actual cost of construction aggregated capital merely 
assumes a new form, it is nevertheless true that, at the expira- 
tion of the period under consideration, when the net results of 
all the agencies of distribution and aggregation of capital are 
ascertained, it will be found that the increased wealth in rail- 



128 THE DISTBIBUTION OF WEALTH. 

ways, telegraphs, telephones, etc., has been brought about with- 
out any reduction of aggregated wealth in other forms of in- 
vestment. It will be found that the bank loans and mortgage 
loans to the people at large have increased in full ratio to the 
increase of population. 

The claim will also be made that the valuation of property in 
1870, being based upon an inflated currency, was much too high, 
thus reducing the amount of the increase of wealth as shown by 
the census. The accepted estimate is that the valuation was 
about twenty -five per cent, higher in 1870 than in 1880. But 
the estimate of 1870 embraces credits to the extent that they 
were included in the assessments of property for taxation. And 
this is true also of the estimate of 1880, or else the estimate of 
1880 is much too high. 

As values contracted, however, the credits of the country rel- 
atively appreciated. If we deduct twenty-five per cent, from 
the amount returned as the aggregate wealth of the country in 
1870, we must add twenty-five per cent, to the aggregate credits 
in 1880. 

The increase in the number of acres in farms in 1880 over 
1870 was 95,850,943 acres ; the increase in the total value of 
farms, most altogether attributable to increased area, was 
$934,292,915. The increase in the total value of city real estate, 
aside from increased value of buildings, was also very great ; so 
that the savings from 1870 to 1880 were probably not in excess 
of the census showing which I have assumed as the basis of 
this estimate. 

It is not, however, material to this inquiry whether this esti- 
mate be too large or too small, since it is clearly evident that 
the process of aggregation is taking up not only the savings or 
increase of wealth, but also the wealth already acquired by the 
people. The distribution of wealth is year by year growing 
more unequal. In other words, the rich are steadily growing 
richer, while the number of those who are without any store of 
savings is increasing both absolutely and relatively, — a fact often 
asserted, and as frequently denied, but a fact, however, which 
the statistics of wealth clearly demonstrate. 

The number of people without any store of wealth, people 
who are wholly dejoendent upon their immediate earnings for 



THE DISTRIBUTION OF WEALTH. 129 

the necessaries of life, and the number who feel the pinch of 
poverty and want, is rapidly growing in ratio to the increase of 
population. 

It is true that the average consumption of the working- 
people has increased, that labor is better paid, that the people 
are better clothed, better housed, and better fed ; but they are 
more dependent, and the relative number of those who succeed 
in laying by a store of wealth as a provision against sickness, 
old age, or as a support for dependent families is dimiDishing, 
notwithstanding the increase in the capacity of labor to produce. 

The rapid increase of wealth now going on in the United 
States is possible in a country only during the period of its in- 
dustrial development. When our lands shall all be occupied and 
improved ; when all the railroads required by the necessities of 
our commerce shall have been built ; when our towns and cities 
shall have reached that stage of arrested growth at which they 
must soon arrive, then the present rate of increase in wealth 
will be no longer possible. Year by year the rate of increase 
will grow less and less, and the possible savings to each worker 
must diminish. 

Herein lies the force of the objection to the policy of per- 
mitting foreign capital to invest in and absorb the revenue- 
bearing property of the country. Foreign investments in the 
durable property of the country represent so much subtracted 
from the opportunities of our own people to acquire wealth. 

The margin of possible savings depending ujDon the increase 
of durable property must diminish as the rate of increase in 
durable property is reduced. If the supply of durable property 
at the present time were adequate to satisfy the demand during 
the next ten years, then during that period labor would be em- 
ployed only in the production of perishable products, articles 
designed for immediate consumption, and there could be no 
savings. The average price of a day's work during that time 
would be the equivalent of the price of the food, clothing, etc., con- 
sumed per day by a worker and the non-producers dependent 
upon him for support. While, then, the people as a whole could 
save nothing, yet one worker, by earning as much as the 
average and consuming less, would be able to retain a portion 
of the money price which he received for his labor, to the dis- 

9 



130 THE DISTRIBUTION OF WEALTH. 

advantage, however, of others. His savings in that case would 
represent not so much ' wealth created, but so much wealth 
acquired out of the total quantity already on hand. 

The value of labor is the price of its product. If the product 
of labor be confined to perishable property, articles intended for 
present consumption, then, the total value of labor being equal 
to the total consumption, the wages of labor are all consumed 
and nothing is saved. If labor be employed also in the produc- 
tion of permanent or durable property, then the total value of 
labor is equivalent to the value of the perishable property con- 
sumed, plus the value of the durable property created. The 
durable property represents the amount saved, and the amount 
of durable property created during any period, less the amount 
of the increase of aggregated wealth, determines the margin of 
savings covered by the wages of labor. 

Hence, in new countries undergoing the process of rapid 
development, where railroads, furnaces, iron-mills, and dwelling- 
houses are being constructed, wages are high, and property is 
easily acquired. The margin of savings is large. Eates of in- 
terest also advance, and encroach upon the margin of labor's 
savings, until, sometimes, the total amount of savings is absorbed 
by capital. In old countries and in old communities, where 
development has been arrested and labor is employed almost 
wholly in the production of perishable articles and maintaining 
in repair the durable property already created, wages tend to 
the minimum, and the margin of saving to labor, if anything, 
is very small. Interest, too, is low, since interest is deducted 
from the savings of labor, and represents the share of the 
product appropriated by capital. The fact that low wages and 
a low rate of interest generally go together, and high wages 
freqilently accompany a high rate of interest, has led some 
writers to the opinion that a high rate of interest and high 
wages sustain to each other the relation of cause and effect ; 
whereas they are each the effect of the same cause. The oppor- 
tunity of labor for increased wages is the opportunity of capital 
for higher interest ; but the more capital takes the less there is 
left for labor; the more labor saves the less there is left for 
capital. 

A country may be devastated by war, cities may be swept 



THE DISTRIBUTION OF WEALTH. 131 

away by fire or destroyed by earthquakes, and the permanent 
wealth of a country thereby reduced in the amount of many 
hundred millions of dollars ; yet it is but a few years until the 
loss is repaired, a new and more beautiful city springs up out of 
the ashes of the old, and the aggregate wealth of the country 
is even greater than it would have been had not the destruction 
taken place. New buildings and better ones replace old and 
inferior structures, which, for the time sufficing, checked im- 
provement ; the way is cleared to new enterprise, new fields of 
employment are opened, wages are advanced, and more labor is 
performed; but in the end a redistribution of property has 
taken place. Capital, by increasing its rate of interest, its rents, 
and its profits, has obtained a large share of the newly-created 
wealth ] but much also has been stored as the net savings of 
workingmen. These savings are in small amounts and widely 
distributed, and the greater part may soon be gathered again 
by the absorbing power of capital; yet the distribution has its 
permanent results, and new owners have been admitted to a 
share of the national wealth. We cannot estimate the priva- 
tions, the suffering, the anguish which the destruction of a 
great city inflicts upon its people. Homes destroyed, little for- 
tunes, representing years of frugal living, swept away in an 
hour of flame ; the feeble and the old, the young and helpless, 
the able-bodied and the strong, alike made dependent on the 
charity of strangers for food and shelter ; but though the losses 
of those whose property is thus destroyed may never be restored 
to them, yet, in a short time, the loss to the aggregate of national 
wealth will be replaced by more and better buildings, and the 
total wealth of the nation will be even greater than it would 
have been had no destruction of property taken place. 

A few months ago Johnstown, Pennsylvania, was carried away 
by flood, and Seattle and Spokane Falls, in Washington, were 
consumed by fire; idle labor, gathered from a dozen States, 
hastened.at once to repair the loss; and it is probable that, at 
the close of the present year, the wealth of the nation will not 
be less than it would have been had neither flood nor fire oc- 
curred. Of the phenomena here described, John Stuart Mill 
offers the following explanation : 

"This perpetual consumption and reproduction of capital 



132 THE DISTEIBUTION OF WEALTH. 

affords the explanation of what has so often excited wonder, — 
the great rapidity with which countries recover from a state of 
devastation ; the disappearance, in a short time, of all traces of 
the mischiefs done by earthquakes, floods, hurricanes, and the 
ravages of war. An enemy lays waste a country by fire and 
sword, and destroys or carries away nearly all the movable 
wealth existing in it; all the inhabitants are ruined, and yet, in 
a few years after, everything is much as it was before. The vis 
medicatrix naturce has been a subject of sterile astonishment, or 
has been cited to exemplify the wonderful strength of the prin- 
ciple of saving which can repair such enormous losses in so 
brief an interval. There is nothing at all wonderful in the 
matter. What the enemy have destroyed would have been 
destroyed in a little time by the inhabitants themselves; the 
wealth which they so rapidly reproduce would have needed to 
be reproduced, and would have been reproduced in any case, 
and probably in as short a time. Nothing is changed except 
that, during the reproduction, they have not now the advantage 
of consuming what had been produced previously. Nor does 
this evince any strength in the principle of saving, in the pop- 
ular sense of the term, since what takes place is not intentional 
abstinence, but involuntary privation." 

Mr. Mill rests his explanation of the rapid recuperation from 
losses occasioned by general destruction of property upon the 
supposed fact of a diminished consumption during the period 
of recuperation.* There may or may not be a diminished 
total consumption during the period of recovery. But the main 
cause of the quick return to, and rapid progress beyond, the 
former condition of wealth is the more rapid creation of wealth 
by means of the more general and more effective employment 
of labor. The rapid increase of wealth in the United States 
during the years immediately following our exhausting civil 
war was attended by no privations ; they were years of pros- 

* This enforced economy affords an adequate explanation of tfie recovery 
of a people from the devastations of war, of hurricane and flood, where the 
period of recuperation is extended over a considerable space of time, and 
before the advent of the present era of surplus energy. But restricted con- 
sumption is not the principal agency to which must he referred the phenome- 
nally rapid building or rebuilding of American cities. 



THE DISTRIBUTION OF WEALTH. 133 

perity and of generous consumption, hut of unwonted industrial 
activity. 

The rapid growth of wealth is checked not by an increased 
consumption that keeps pace with the capacity of labor to pro- 
duce, but by the limitations of wealth, which, being approached, 
the demand of capital for those forms of durable property which 
can be made to yield a revenue is satisfied, and labor goes un- 
employed. Convince capitalists beyond a doubt that a new 
railway from New York to San Francisco would pay a dividend 
of ten per cent, on the cost of construction, and it will be but a 
short time until a new railway will be built and splendidly 
equipped. Give satisfactory assurance of a permanent increase 
of profits in all the manufacturing industries, and within a few 
years the product can be doubled. 

The labor of the people is of such capacity that, if it could be 
properly combined and directed, it might, in a short period, 
construct all the houses required for the comfort of the people, 
and then double the number. But it is not to the interest of 
capital to create that of which there is already enough to com- 
mand the largest revenue. 

Labor, without liberal savings, is without power to utilize 
surplus labor for the benefit of those who are without acquired 
capital. To do so would impair the value of existing invest- 
ments. To construct houses for those who occupy rented 
houses, when there are already houses enough, is to deprive the 
landlord of his tenants, to make his houses superfluous. Here, 
then, arises a direct conflict between labor and capital, — a con- 
flict in which labor is perpetually vanquished, since labor can 
do nothing without capital. With a capacity to produce far in 
excess of its wants, labor continues poor because unable to con- 
trol the machinery by which wealth is distributed. 

The agriculturist produces enough to supply the demand 
for consumption, yet the prices he receives for the products of 
his labor yield him little or no margin of savings. To increase 
his profits he increases his product, only to find that a surplus 
reduces values, and his profits are less than before. 

A sufficient amount of woollen goods is manufactured to sup- 
ply the demands of the market. The worker in this industry 
receives enough to defray the expenses of an economic living 



134 THE DISTRIBUTION OF WEALTH. 

for himself and family, but not enough to enable him to save. 
If the product be increased, the price goes down, and nothing la 
added to his wages. He is unable to accumulate ; he cannot 
acquire houses and lands ; he must continue to pay rents. 

The interests of labor require a greater distribution of wealth ; 
the interest of capital is in the direction of the concentration of 
wealth. There being, as has been shown, a limit on the amount 
of wealth, the question is one of distribution, — what is owned 
by the few cannot belong to the many ; two men cannot own 
the same thing, and the creation of a surplus impairs the value 
of the whole. 

"Wealth being a product of labor, when the supply is sufficient 
and the demand for the products of labor is satisfied, the de- 
mand for labor is satisfied. Labor competes not only with labor, 
but with the products of labor in the form of accumulated 
wealth. Wealth blocks the way to the creation of new wealth, 
and labor must continue to pay tribute in the form of rents, 
interest, and profits. When, in the accumulation of national 
wealth, a certain stage has been reached, and the demand for 
labor has been diminished by competition with its accumulated 
product, the tendency to lower wages, or at least to a smaller 
margin of savings, is inevitable. 

Wealth controls production, regulates commerce, and fixes 
the conditions of labor. The interests of wealth are not in 
direct conflict with an increased consumption of perishable 
products by the workingman, nor with a demand for a rate of 
wages sufficient to supply him with such part of the perishable 
product of labor as he may consume ; but its interests are in 
conflict with the savings of labor, which must take the form of 
durable property. For, when labor owns its own dwelling it 
pays no rent ; when it acquires money it ceases to pay inter- 
est. If its savings are multiplied, and take the form of durable 
property, — and there can be no considerable savings except in 
the form of durable property, — values of existing property are 
destroyed. 

It will be seen that an abundance of wealth in the hands of a 
few imposes conditions of hardship on the many. Wages, values, 
as we are so often reminded, are regulated by the law of supply 
and demand ; but the law of supply and demand, in its opera- 



THE DISTRIBUTION OF WEALTH. 135 

tion and effects, depends upon conditions determined by the 
interests of accumulated capital. 

Is there a remedy? None which is not in conflict with the 
•interests of centralized capital. Because, in the nature of 
things, the remedy must be chiefly directed not to the creation 
of more wealth, but to the distribution of the wealth we have, — 
to a reduction of the tribute which labor pays to capital. 

Wealth and poverty are correlative conditions ; they are the 
ebb and flow of the same tide, the crest and the hollow of the 
same wave. The snow that lies in drifts along the hedges was 
gathered from the fields. There are no hills without valleys 
between. 

It is true that capital, which is but the stored product of 
labor, competes with capital, and that labor is benefited by the 
competition. But, though the tribute " may be reduced, the 
savings of labor are not materially increased. Labor requires 
food, clothing, and shelter; capital requires neither. A thou- 
sand dollars earns eighty dollars in a year ; in ten years it has 
doubled. Its earnings consist of what it draws to itself of the 
product of labor. Capital creates nothing in the sense of that 
term as applied to labor. Money has no hands, it builds no houses, 
weaves no cloth ; it handles neither spade, pick, nor plough. 

Our late civil war withdrew from productive labor on the 
farm, in the factory, in the mines, on railways, and in the shop 
a million of men ; yet, with the labor that was left, two magni- 
ficent armies were fed, clothed, equipped, and transported ; the 
people at home were fed and clothed ; houses, mills, and steam- 
ships were built, railways were constructed, and the wealth of 
the nation continued to grow. The census of 1870 shows not 
only a greater increase in proportion to population, but a greater 
aggregate increase of wealth than that which took place between 
the years 1870 and 1880. It is true that the relative valuation 
of property in 1870 was higher than in 1880, but, adjusting 
valuations to the same standard, the exhibit shows a marvellous 
growth of wealth notwithstanding a destructive and expensive 
war. 

The reasons of this remarkable growth of wealth, under con- 
ditions apparently the most unfavorable, were, first, the unusual 
activity of the productive energies of the people, and, second, 



136 THE DTSTEIBTJTION OF WEALTH. 

the employment of a greater per cent, than usual of the labor 
force of the country in the production of durable property, such 
as dwellings, mills, factories, and railways. 

All this increased wealth was the product of labor, the work 
of hands and brains. The capital employed was the product of 
former labor. The only creative power is mind and muscle ; 
capital in itself is inert. 

Let us consider, further, the causes operating on the distri- 
bution of wealth. 

'No individual can himself use a large amount of property. If 
each worker were the owner of all the property used by himself 
and family, or an amount of property equivalent in value, the 
amount which it would be possible for any one person to own 
would be comparatively small. If the common people all en- 
joyed the higher comforts of our civilization, and were all 
provided with good homes, the necessary limit of property to 
the head of each family, under the conditions named, would 
probably not exceed the value of six thousand dollars. But if 
each one were suj^plied with all that is required for his own use, 
there would then be no use for property owned by any person 
in excess of what he might require for use ; and, being useless, 
it would be without value. If A owns one hundred houses, he 
can occupy but one ; and if every other person be supplied with 
a house of his own, such as fills the measure of his wants, then 
A's other ninety-nine houses, being without use, are without 
value. If A owns a hundred horses, and can use but two, the 
other ninety-eight are of no value, unless some other person be 
in need of horses. It follows, therefore, necessarily, that the 
accumulation of property by some in excess of the amount 
required for their own use, or, in other words, of property which 
derives its value from the fact that it is used by other people, 
diminishes the amount of property which may be owned by 
others. 

If A owns a residence worth one hundred thousand dollars, 
occupied by himself and family, though the creation of this 
property absorbed a greater proportion of labor than what 
would be A's distributive share if each person were awarded 
the measure of his earnings, the ownership of this costly resi- 
dence does not interfere with the acquisition of property by 



THE DISTRIBUTION OF WEALTH. 137 

others. The erection of costly dwellings by men of wealth 
employs labor and, to the extent of the cost of construction, 
distributes values. If A, being worth one million dollars, 
builds for himself a residence worth the amount of one hundred 
thousand dollars, the cost of construction, one hundred thou- 
sand dollars, is distributed among the people. A's fortune 
remains the same, but has, in part, assumed another form ; and, 
as a result of the transaction, the people have acquired one 
hundred thousand dollars in property which they did not own 
before. And since this costly residence is appropriated to A's 
own personal use, and does not depend for its value upon occu- 
pancy by persons other than the owner, it cannot be employed 
as a means of aggregating wealth. It does not stand in the 
way of the construction of dwellings for others. But the 
ownership of property from which a revenue is derived — 
property belonging to one person and used by others, or of 
property in which capital is employed at a profit in the pro- 
duction of articles for consumption — reduces the amount of 
property which may be owned by others in the amount of the 
value of the property so employed. Those who do not own the 
property which they use, but who pay tribute to capital in the 
hands of other owners by way of interest on credits, rents on 
houses or lands, or profits on articles of consumption, can ac- 
quire property only by securing it out of the excess in the 
hands of those who hold the aggregated capital of the country ; 
that is, presuming the limit of wealth has been reached. And 
if that limit has not been reached, they may acquire permanent 
property out of the savings of labor, which under present eco- 
nomic conditions are absorbed by capital, leaving nothing for 
labor as a whole. 

If the limit of wealth be reached in any class of property, as 
in woollen-mills, iron-founderies, flouring-mills, or manufactories 
of machinery, the same principle holds good as to these classes 
of property ; and those who are without can secure a part only 
by means of a wider distribution of that which already exists. 

True, when, for instance, the demand for woollen-mills has 
been supplied, more woollen-mills may be erected, if capital can 
be diverted to such purpose; but the effect is a destruction 
and distribution of values, and not an increase of the nation's 



138 THE DISTEIBUTION OF WEALTH. 

wealth. This form of distribution, by means of the creation of 
a surplus of a certain kind of property, an excess beyond the 
demand, destroys values and reduces the total wealth. 

Distribution in this manner is restrained by the fact that the 
creation of a surplus rapidly diminishes the value of the whole, 
and, the effect soon becoming apparent, capital avoids 
destructive competition. 

If there were enough and no more than enough of woollen- 
mills to supply the demand for woollen fabrics, and the owner- 
ship were distributed among all the employes who operate them 
in proportion to the labor and skill of each, so that each em- 
ploye would in effect use his own property, or would own an 
equivalent of the property used by him, this would be such dis- 
tribution as would give to each worker the entire product of his 
labor; while the indefinite increase of the number of mills 
would destroy the value of both capital and labor employed 
in that industry. It will be seen, therefore, that an enforced 
distribution by means of that excessive competition which de- 
stroys values is not to be desired, even if it were practicable. 
Distribution by such means is, however, impossible. What is 
needed, and that which alone is attainable, is not more mills, 
more furnaces, more railways, when there are already enough, 
but a distribution of the ownership of the wealth we have. 

The quantity of product may be increased to the full measure 
of the demand, but an increase beyond that point is not only a 
waste of labor, but a destruction of existing values. The con- 
sequence would be a general derangement of values, panics, 
hard times ; the weak would succumb to the pressure, and the 
end would be an increased aggregation of wealth in the hands 
of those strong enough to break down weaker competitors and 
control markets. 

Competition in any one industry tends to bring prices of 
labor and of the products of labor to the general level of prices 
in other industries. But excessive competition forces prices 
below the normal standard, first in one industry and then in 
another, to the disadvantage of all, except it be the creditor 
classes, whose dollars grow large as values grow small. 

Any policy which tends to cheapen the price of the products 
of labor in general is detrimental to the people, for the reason 



THE DISTEIBUTION OF WEALTH. 139 

that it increases the value of credits. The true policy for the 
general good is that which promotes high prices for labor and 
its products in all departments of industry and yet tends to an 
equitable equalization of values among all industries, having 
due regard to quality of labor and skill employed. 

It is true that a generation hence the greater portion of 
durable property in its existing forms will have been consumed 
by use or wasted by decay. And it may be urged that this 
process of continual consumption opens the way for an equitable 
distribution of property. But, in answer, it is sufficient to say 
that revenue-bearing property perpetuates itself. New forms 
of wealth, which take the place of the old, represent only a part 
of the revenues derived from the property which they replace. 
So far as involved in the question which we have been consider- 
ing, durable property may be regarded as though subject to 
neither wear nor decay. 

Lavish expenditures of the wealthy in the erection of splendid 
palaces, or in the construction of steam-yachts, or for costly 
equipages, blooded horses, diamonds, paintings, statuary, ser- 
vants in livery, or any object of personal comfort, or the gratifi- 
cation of extravagant tastes, are not always to be condemned 
as detrimental to the interests of labor. Such expenditures 
constitute an important agency in the distribution of wealth. 
They afford to labor the opportunity to reclaim what labor 
has lost. 

Palaces for the wealthy may represent unjust gains ; but they 
also represent so much wealth distributed among the people, so 
much reduction in the amount of revenue-bearing property. 
The costly mansion may overshadow, but it does not compete 
with, the cottages of the poor. 

It is the tenement-house and the rented flat that hold the 
laborer in bondage and deny him a home of his own. It is not 
the rich prodigal, but the man of business that absorbs the earn- 
ings of labor and obstructs the way to prosperity. The rich 
young spendthrift may set a bad example in morals ; he may 
bring grief to fond parents ; and yet to the people he may be a 
blessing in disguise. As an agent in the distribution of wealth 
he is often an important and useful factor. In utter disregard 
of Dr. Franklin's frugal maxims, he tears down the mountain of 



140 THE DISTRIBUTION OF WEALTH. 

wealth piled up by his worthy ancestors, and scatters the golden 
coin among the crowd of scrambling poor. 

No enterprise, no business, can be established without the aid 
of capital, without paying tribute to capital. In any manu- 
facturing industry, before a beginning can be made there must be 
expensive buildings, costly machinery, and money at command 
to pay numerous employes. Capital exacts its tribute ; and the 
man who attempts to establish himself in any business cannot 
rely with confidence on success. If he add his own accumula- 
tions to the capital of others, he incurs the serious risk of seeing 
his own savings swallowed up in rents, interest, and the losses 
occasioned by fluctuating values. Speculation is an element in 
every business. Every enterprise is directed, managed, and 
controlled in the interests of capital. Labor cannot organize 
except under the control of capital. For the privilege of exist- 
ing, labor must pay tribute to aggregated wealth. Wealth, it is 
true, cannot exist without labor, since all wealth is created by 
labor; but wealth, when created, becomes the proprietor of 
labor, the monarch of muscle, a king beneath whose golden 
sceptre toiling millions bow and cringe. But while they sweat 
and toil, they grow weary of a king who considers only the 
splendor of his court and the garnered wealth in the vaults of 
his royal treasury. The lords of wealth, who have been knighted 
by the touch of his royal wand, are loud in their praises of the 
king ; but the millions whose faces are bronzed, and whose 
hands are hard, often complain of the heavy tithings, and mur- 
mur of the injustice of a king so preoccupied with the splendor 
of his retinue and the grandeur of his palace that his royal 
mind is little concerned for the cottages of the poor. 

The people demand a charter of King John. They do not 
seek to uncrown him, they do not clamor for a new king, but 
they ask for some limitations on his royal prerogative. They 
have been too long deluded with the stale old maxim that prices 
are regulated by the law of supply and demand. They have 
found this law, under present changed conditions, wholly inade- 
quate to reduce inequalities of opportunity and secure to them 
the earnings of their toil. 

During a recent period the entire country has been covered 
with a net-work of railways ; splendid cities have sprung up ; 



THE DISTRIBUTION OF WEALTH. 141 

and of factories, furnaces, and mills the supply outruns the de- 
mand ; agriculture has doubled its product; magnificent churches 
and splendid palaces everywhere attest the overflowing abun- 
dance of wealth ; and yet millions still abide in rented cottages 
or huddle together in crowded tenements; many are idle for 
want of work, and many are hungry and meanly clad. 

If labor could be utilized, if it could be combined and di- 
rected, its capacity is not only sufficient to feed and clothe the 
people, but within a short period to furnish every family with 
a home of its own. But money is required to put labor in 
motion, and money cannot be commanded, for capital cannot 
afford to destroy itself. 

The problem is not now how to increase the effective power 
of labor, — that problem has been solved, — but how to employ 
labor so as to secure to every oue the opportunity to work and 
to enjoy the product of his toil. 

In the pursuit of this object it is evident that, without in 
some manner modifying the tendency of wealth to accumulate 
in the hands of a few, but little can be accomplished. 

Mr. Carnegie has said that the contrast between the palace 
of the millionaire and the cottage of the laborer measures the 
change which has come with civilization. Does it not also 
suggest the change which is yet to come ? 

There must be some abatement of the tribute which labor 
pays to hoarded wealth. The workingman is deprived of the 
product of his industry ; his savings are taken from him. He 
sees men in the possession of fortunes measured by millions 
which he knows they never earned, but which they are said to 
have acquired according to the time-honored usages of trade 
that are vouched for by all the professors of political science as 
in full accord with the laws of progress and of civilization. He 
is assured that the drawing is perfectly fair, " conducted in the 
presence of honorable gentlemen;" but he observes that the 
managers of the lottery of distribution have grown wealthy, 
while he has remained poor. 

What can be done to secure to each worker a fairer measure 
of reward for his industry ? Arbitrary distributions of wealth 
are of course impracticable, and, if attempted, they would afford 
no remedy. 



142 THE DISTEIBUTION OF WEALTH. 

The same forces continuing to operate, the same results would 
be repeated, and soon a second distribution would be required. 
The people would lose all incentive to industry and economy. 
The right of each to the product of his own labor would cease 
to be respected, and an utter demoralization of industry would 
ensue. 

The remedy must be sought in restraints on the power of 
capital to absorb the earnings of the worker, and there must be 
such readjustment of economic forces as will equalize opportu- 
nities and give full play to the productive power of labor. The 
remedy must not ignore fundamental laws of trade, but make 
use of them; it must not destroy the incentive to the acqui- 
sition of property, but extend the opportunity to acquire a 
share of wealth to a greater number. In seeking a wider 
distribution, it must guard against the destruction of values; 
it must proceed on general principles along well-defined 
lines. 

The value, the necessity of very considerable accumulations 
of wealth must be fully recognized. In many industries large 
capital is essential to economic production. Great enterprises 
are not accomplished without those combinations of capital 
which are impracticable among a people where there are no 
persons of wealth. Social refinement, moral and intellectual 
culture, are the growth of leisure and opportunity, and no class 
of persons are more essential to the moral, social, and industrial 
welfare of a people than those possessing fortunes adequate to 
the demands of the highest culture. But accumulations of 
wealth beyond reasonable limit impose burdens upon the people 
without corresponding benefits. When centred in the fortunes of 
a few, society is deprived of the advantages which constitute 
the justification of wealth. 

Extreme centralization of wealth is responsible for the spirit 
of communism and vulgar class antipathy now manifested by 
large numbers of people in both Europe and the United States ; 
and, unless we are ready to deal with still graver evils, it were 
best to make speed in correcting those which give rise to the 
prevailing spirit of discontent. 

I shall in other chapters set forth such remedies as I believe 
to be efficient and practicable, at least in great measure, to re- 



THE DISTRIBUTION OF WEALTH. 143 

move those causes which hinder the working-people from reach- 
ing that condition of independent thrift which, considering the 
present productive power of labor, I believe to be attainable. 



CHAPTEK V. 

SAVING — CREDITS. 



The- suggestion is often made that the poverty of the poorer 
classes is attributable chiefly to their own improvidence and 
wastefulness, and that, if each would habitually save a small 
portion of his earnings, all might accumulate wealth. Let us 
inquire if this be true. 

By saving, as that term is commonly understood, is meant a 
diminished consumption. What are the effects of saving, in 
this restricted sense of the term, upon the accumulation and 
distribution of wealth ? 

Consumption treads close upon the heels of. production. 
Whatever is produced, to be of value, must be consumed, either 
in the form of food, clothing, fuel, and the like, or in furniture, 
dwellings, and other durable property. The question is, there- 
fore, not how much the people shall consume, but in what form 
the product of labor shall be consumed. Shall they eat it, wear 
it out in clothing, or build houses to live in ? " Do neither," 
says the strict economist ; " sell it and save the money." By 
this is meant, let some other fellow eat it, and give you his 
money or his note. But where is the other fellow? Our free- 
trade friends tell us that he works in a factory across the sea ; 
and our worthy Secretaiy of State insists that he is lolling in 
the sun down in Mexico or South America. And we are told 
that all we need, in order to accumulate wealth, is to open our 
ports and send our ships abroad laden with the surplus products ' 
of our labor. We must seek a foreign market. But when we 
find the Englishman or Frenchman or Spanish- American we are 
looking for, it is altogether probable that, instead of paying good 
hard cash for the products of our labor, he will insist on swap- 



144 THE DISTRIBUTION OF WEALTH. 

ping either food or clothing, which we shall be compelled to eat 
or to wear out, and there will be nothing saved after all. 

The capacity of labor to produce is at present greatly in 
excess of consumption. If all the labor and machinery in 
the various industries of the country were steadily employed 
throughout the entire year, the surplus product for which, at 
the present rate of consumption, there could be no demand 
would be very large. This is especially true in the manufactur- 
ing industries. Hence arises the incessant competition among 
producers for a larger share of the market. 

If the entire labor in any one industry of the country be all 
the time effectively employed, the product chokes the market. 
If a portion of the workers be for a time withdrawn from 
production, while others continue steadily employed supplying 
the market with the products of their labor and deriving what- 
ever advantage may result from the withdrawal of other labor 
from competition, the workers out of employment, pressed by 
necessity, soon return to a fiercer competition. Thus it is 
that, in order to secure their due proportion of employment and 
of the product of labor, the whole body of working-people are 
constantly striving against each other in heated competition, 
while they are unable to maintain prices by means of such com- 
binations as enable capital to maintain its margin of profits. If 
consumption always kept pace with production, a glut in the 
market could never occur. But when people attempt to save in 
the form of money or credits ; when, in other words, they put 
into the market more than they take out, products accumulate, 
production outruns consumption, prices are deranged, distribu- 
tion is interrupted, and the demand for labor ceases, until, by 
enforced idleness, production falls within the limits of the 
demands of trade. 

There is not a uniform distribution of labor nor of the 
products of labor among the working-people. Some are em- 
ployed the year round, while others may be idle half the time. 
The result is that, notwithstanding the capacity of labor to 
produce more than is wanted, there is always much individual 
distress. Owing to excessive competition, the savings of labor 
which take the form of durable property are absorbed by capi- 
tal, the laborer shifts from place to place and lives in rented 



THE DISTKIBUTION OF WEALTH. 145 

houses, and the mortgage which aggregated wealth holds on 
his muscle and his brain grows and grows. It never can be 
paid off, extinguished, or evaded. 

The uncertainty of permanent employment at any one place, 
or at steady wages, greatly hinders, when it does not wholly 
prevent, the acquisition of homes by workingmen, and opens to 
capital the opportunity for investment in the homes of the 
poor. 

Saving, in the form of money, means deferred consumption. 
If, for instance, in the course of a year A saves one hundred 
dollars, he has put into the market one hundred dollars' worth 
of the product of labor more than he has taken out, while 
others have consumed that much in excess of their earnings, in 
excess of their contribution to the market. A's savings, in this 
form, measure an excess of consumption over production by 
other persons. It will be seen, therefore, that all persons cannot 
save at the same time, and that the total savings, in the form of 
money, are limited to a small aggregate. These accumulations 
must be constantly converted into other forms of property ; if 
into food or clothing or other perishable property, no permanent 
saving is eifected. Accumulations of wealth are represented by 
property of more durable character. Durable property consists 
mostly of articles of considerable value. The small accumula- 
tions of money savings which represent only suspended con- 
sumption, and which are, in the nature of things, possible to 
any considerable number of workers, are in amount too small to 
pay for the building of houses or the purchase of machinery, or 
even of valuable furniture ; and for this reason such savings are 
less liable to be invested in any form of durable property, but 
are expended for articles of perishable nature, for the purchase 
of which small sums are available. 

A general effort on the part of the people to save, in the form 
of money or of credits, means a general refraining from the 
purchase of the products of labor. To the extent that the effort 
succeeds, it means that the people have quit work. This form 
of saving, therefore, defeats itself. The only form of saving 
practicable to the people at large consists in the conversion of 
money savings into the forms of durable wealth. Saving, in the 
true sense of that term, is that form of expenditure by which 

10 



146 THE DISTEIBUTION OF WEALTH. 

the wages of labor are converted into property that is both 
useful and durable. The other form of saving, by which the 
individual may profit at the expense of his fellow-workers, con- 
sists in contributing the products of labor to the common mar- 
ket, and refusing to accept the products of other labor in ex- 
change, but storing up wages in money and then in credits, not 
for the purpose of a consumption reasonably deferred, that it 
may take the form of expenditure for durable property, but 
that, by means of interest, it may grow into a future claim for 
a larger share of the products of labor than its present 
equivalent. 

The total consumption of a people must be the equivalent of 
the total production; while the production and consumption of 
an individual member of society may greatly vary. To balance 
the sum of the accounts of all the individuals of a nation who 
contribute to one common market, so that the column which 
represents consumption will foot up the same amount as the 
column which represents production, requires that the industries 
in their several classes, as well as production in its individual 
subdivisions, by means of ever-varying quantities and fluctuating 
prices, shall so adjust themselves as to reduce the grand totals 
to equivalent amounts. 

Industrial disturbances are in great measure attributable to 
competition in saving, using the term in its limited sense. 
Production and consumption must move together; when one 
halts the other must stand still. Industrial harmony requires 
that they keep step and move at a steady, unbroken pace. 

Since articles of food and clothing cannot be stored for any 
great length of time, each year's production must provide for 
each year's consumption ; and wealth, beyond the amount of 
perishable products required for consumption within the limits 
of a short period, must be stored in the form of l^ouses, mills, 
railways, machinery, tools, and other like products. The title 
to wealth, however, or to the products of labor, may exist in 
the form of credits, and credits may accumulate to the amount 
of one-third or more of the aggregate wealth of a country. 

"Wealth cannot be hoarded to any great extent in the form of 
money, for the total amount of the money in the country does 
not exceed one-fortieth part of the nation's wealth, and what 



THE DISTRIBUTION OF WEALTH. 147 

there is is required for use in effecting exchanges. Wealth 
saved usually remains in the form of money only during that 
short period which intervenes before it takes the form of other 
property, or the form of credit. The hoarding of money causes 
an interruption of exchange and a disturbance of values. 

It is evident, therefore, that, while one individual may pro- 
vide for his own future wants by the acquisition of property or 
of credits, a whole people cannot so provide. The accumula- 
tions of the wealthy represent the power of a certain number 
of persons, necessarily limited, to command the products of the 
labor of other persons. Production must go on ; the people 
must each year create that which they that year consume. 
One man may acquire a fortune by saving ; but fortunes are 
possible only to a few. 

Savings beyond those accumulations necessary to provide 
property actually used by the owner and his family are repre- 
sented in rented houses, mills, or railways, the rents or profits 
of which command a portion of the products of other men's 
labor. It is from the nature of things impossible that the mass 
of the people should store up wealth for future consumption. 
They may acquire good homes, good churches, good roads, and 
such other durable property as they may need or desire for use ; 
but food and clothing they must produce as they consume. 

The total savings of the entire people are represented in the 
durable property which they use and that portion of the annual 
product on hand for consumption. The margin of savings is 
fixed within natural and somewhat narrow limits, and it follows 
that the greater the amount of savings which fall to the share 
of a few, the smaller the amount which is left for those who 
remain. 

The wages of the laboring man are, by unchangeable natural 
law, limited to a sum but little in excess of the cost of food and 
clothing for himself and family, and that excess is measured by 
the additional cost of his dwelling, furniture, household utensils, 
and tools. 

Could there be a storage of articles of food and clothing, 
wages might be temporarily increased, but would then vibrate 
as far the other way, since the limit of consumption, and not of 
the powers of production, determines the limit of wages. 



148 THE DISTHIBUTION OF WEALTH. 

Political economists have indulged in elaborate metaphysical 
disquisitions on " what determines the rate of wages." Were I 
required to give a short answer to this question, I should say 
the human stomach; but, if permitted a little more space, I 
should add, the intensity of the prevailing desire for the luxuries 
of life. 

When one portion of the people spend less — that is, consume 
less — than they produce, less than their relative proportion of the 
total consumption, other people must consume more than they 
produce. In this manner, that part of the people who consume 
less than they produce draw to themselves the durable property 
of the country. They are thrifty at the expense, and often to 
the detriment, of the laboring-classes at large. 

This is the principle involved in the objection to the importa- 
tion of Chinese into this country, and also to the immigratron 
of a class of Europeans who are industrious producers but more 
meagre consumers than the American people. And on this 
principle rests one of the chief objections to unrestricted com- 
merce with foreign nations. 

The standard of wages is gauged by the average consumption 
of the whole people who compete in a common market. While 
for each individual, on the principle of getting the best of a 
bargain, it may be a wise policy, as a competitor against his 
fellows, to save all he can ; yet excessive savings, and resultant 
accumulations of credits, or of revenue-bearing property, which 
operate in like manner, are possible only to a relatively small 
number of people, and are an injury to the people at large, 
except that they confer certain compensating benefits elsewhere 
considered. 

The consumption of different orders of industrial people varies 
greatly, and there is consequently a corresponding variation in 
the wages, or, what is the same, the prices of the products of 
the labor of these different orders. This is not necessarily 
detrimental to society, since a relatively large amount of savings 
may be left to each. But high wages for one class of workers 
which result in accumulations of durable property to that class 
greater than an equitable proportion of the permanent wealth 
of the whole peoj^le are detrimental to the interests of other 
laboring-classes, who are thereby necessarily deprived of the 



THE DISTEIBUTION OF WEALTH. 149 

acquisitions to which they are entitled. Undue compensation 
to one class means a corresponding loss to other classes. 

It is therefore not to the interest of the people to sustain a 
disproportionately high rate of wages to any one industrial 
class. A high standard of wages in general is to be desired, as 
by this means the share of capital is diminished ; but, since the 
total wages must fall within the limits of the total consumption, 
the wages of each class should bear an equitable relation to the 
wages of every other class. Too high wages to one class mean 
too low wages to another class. Wages in skilled industries are 
high ; but the consumption of skilled workmen and their fami- 
lies, as a rule, is relatively large. The savings of skilled work- 
men also are larger; but this class of workers occupy more 
costly dwellings, and use more expensive articles of durable 
property, and their savings in the form of credits are not ex- 
cessive. The surplus which they are enabled to store up for 
sickness or old age does not, perhaps, go further than the surplus 
saved by the average laborer. Such at least is the relation 
which the industries ought to bear towards each other in a 
healthy social economy. 

To illustrate the effect of savings, as well as the effect of in- 
terest accumulations, on the distribution of wealth, let us sup- 
pose the existence of an island, disconnected from all other 
communities, and therefore without foreign trade or exterior 
influence of any kind to affect the growth or distribution of 
wealth. To eliminate every element not essential to the illus- 
tration, we will assume the existence of conditions wholly im- 
possible in any existing community, because of differences in 
intellectual capacity, physical power, the accidents of disease, 
the uncertainty of the seasons, and the eager graspings of 
avarice. 

This island, we will suppose, contains eight hundred and one 
thousand acres of land, the soil of which is of uniform fertility, 
one locality affording no advantage over another. Eight hun- 
dred thousand acres is divided into five thousand farms of one 
hundred and sixty acres each. The remaining one thousand 
acres are occupied by the houses, shops, and mills of mechanics, 
artisans, and professional men. There are fifty thousand people 
divided into ten thousand families of five persons to each family. 



150 THE DISTRIBUTION OF WEALTH. 

There is one laborer or worker to each family, who engages in 
productive industry, — that is, in producing those things which 
enter into the common market. The other members of the 
family devote their time to domestic service, education, and the 
creation for home consumption of such products as are not 
bought and sold in the market. The annual product of each 
worker is equivalent to the annual product of every other 
worker. There are five thousand agricultural families, and five 
thousand mechanics, artisans, clerks, manufacturers, merchants, 
and professional men. Each farm of one hundred and sixty 
acres is valued at four thousand eight hundred dollars, and each 
agriculturist owns, besides, one thousand dollars' worth of other 
property, making a total of five thousand eight hundred dollars. 
Each mechanic, artisan, etc., owns an equal amount, invested in 
a home, machinery, tools, implements of trade, and other per- 
sonal property. The total amount of the money of the country 
is one million dollars, which is equally divided among the ten 
thousand families, making one hundred dollars to each family, 
which amount is embraced in the total of five thousand eight 
hundred dollars owned by each family, as stated above. The 
total product each year, embracing products of agriculture and 
additions to, and improvements on, buildings, machinery, etc., 
is ten million dollars, or one thousand dollars to each family. 
Each family consumes, each year, an equal amount of the prod- 
ucts of labor, and requires an equal amount of professional 
service. The production and consumption of each family being 
equal, there is neither increase nor diminution of wealth. The 
community has reached that stage of development where every 
family is supj)lied with all the property requisite to satisfy its 
wants; where no improvement or addition is needed beyond 
keeping property in repair and supplying the place of that 
which wears out. The population neither increases nor dimin- 
ishes. The total wealth of the island will therefore remain 
fixed at fifty-eight million dollars. 

We will now suppose that out of the ten thousand workers 
there are one hundred persons by the name of Smith, who con- 
ceive the idea of increasing their wealth beyond that of their 
neighbors. Since the demands of the people, as a whole, for 
wealth are fully satisfied, the aggregate wealth cannot be in- 



THE DISTRIBUTION OF WEALTH. 151 

creased. The people have no use for more property, and there 
is therefore no demand for more labor. But the Smiths conceive 
the idea of acquisition by saving, by consuming less than they 
have hitherto consumed. They discover that, instead of ex- 
pending one thousand dollars per year, they are able to subsist 
comfortably on eight hundred dollars per year. As the products 
of all labor go into and, as required for consumption, are pur- 
chased from the same market, the Smiths continue to produce, 
as before, to the amount of one thousand dollars per year. The 
product of their labor is disposed of at the usual rates in the 
market, and they consequently receive during the year one 
thousand dollars, and the product of their labor is consumed as 
a part of the whole. At the end of the year, Smith finds that, 
instead of one hundred dollars in money with which he began, 
he has three hundred dollars, having consumed two hundred 
dollars less than the amount he received for the product of his 
labor. As each of the one hundred families of Smiths consumes 
two hundred dollars less per annum, the total consumption falls 
off twenty thousand dollars in amount ; and in order to make 
production and consumption equal, the remaining nine thousand 
nine hundred families are compelled to reduce the product of 
their labor to the limit of consumption or demand, or to nine 
hundred and ninety-two dollars per annum. If we suppose 
them to continue to produce, as before, one thousand dollars 
each, the supply each year would exceed the demand in the 
amount of twenty thousand dollars, thus disarranging the mar- 
ket. Supply and demand, or production and consumption, will 
always reach an equilibrium by the increase of the one or the 
reduction of the other. For the purpose of this illustration it 
is not material by which method we assume the equilibrium to 
be reached. 

The Smith families begin the process of saving by consuming 
less than the annual product of their labor. They save twenty 
thousand dollars per year. In one hundred years they would, 
at this rate, save two million dollars. In two thousand eight 
hundred. and seventy years, by the process of saving and loan- 
ing their savings, without interest, their credits would equal the 
total property of the island, less the amount of property which 
they originally owned, and they would, in effect, own the island. 



162 THE DISTRIBUTION OF WEALTH. 

However, at the expiration of ten years, the Smiths have 
hoarded up two hundred thousand dollars of the money of the 
island. The money remaining in the hands of the people is not 
sufficient to answer the requirements of trade. There is a de- 
mand for more money. Smith says he has money that he is not 
using, and that for a small compensation, eight per cent, per 
annum, he would be willing to loan it. So the one hundred 
Smiths all go to loaning at eight per cent. Loaning both annual 
savings and interest accumulations each year, at the end of 
twenty years they have accumulated seven hundred and twenty- 
one thousand four hundred and eighty dollars ; and at the 
expiration of sixty-five years their credits would reach the sum 
of fifty-nine million dollars, — an amount in excess of the total 
value of the island and the accumulated wealth of the whole 
people. 

If, instead of one hundred Smith families, there be two hun- 
dred families, — that is, one fiftieth of the entire population, — 
who save at the rate of two hundred dollars per year, receiving 
interest at the rate of eight per cent, after the tenth year, they 
will own the island in less than fifty years. 

But, after the enterprising Smiths have accumulated a large 
capital, they become ambitious to engage in business enterprises, 
and they employ their credits in other ways. Having control 
of the money market, they may inflate or depress values at will. 
They call upon the Joneses, the Thompsons, and the Johnsons to 
pay their notes by a certain day. Had they called on but one 
or two, the necessary amount of money could be readily found ; 
but when two or three hundred debtors are called upon at the 
same time to discharge a large aggregate amount of credits, 
money becomes scarce, — there is a^ tight market. The debtors 
offer to sell farms, mills, anything, to raise money ; but, owing 
to the stringency in the money market, no one has money to 
invest, except at ruinously low prices. Prices go down; and 
then the Smiths buy real estate. When the pressure has been 
removed, business gradually recovers tone and values rise again. 
There is a demand for real estate. The Smiths hold on to the 
lands they have acquired until the pressure of a demand which 
has grown beyond the supply pushes prices higher than they 
were before the fall -, and then the Smiths have real estate to 



THE DISTRIBUTION OF WEALTH. 153 

sell, — on time, deferred payments drawing usual interest and 
secured by mortgage. 

Add to the situation the uncertainty of varying seasons and 
fluctuating markets ; introduce the cheap labor of the unfortu- 
nate or improvident poor, dependent upon the capital of others 
for their employment, and we have an illustration of the power 
of accumulated capital and the subjection of those who are 
without it to those who have it. 

In the foregoing illustration it will be observed that the 
Smiths do not really save any of the products of their own 
labor. The wheat, the corn, and the cloth which they produce 
are not saved, but are consumed by others fully able and willing 
to produce all they desire to consume. But, since all products 
are thrown into a common market, they cannot, if they would, 
avoid consuming Smith's wheat and corn and cloth; and the 
only means they have to keep up with Smith in the race, and 
avoid getting in his debt, is to limit their own consumption to 
Smith's standard of living. If Smith wears wooden shoes and 
drinks his tea without sugar, they must do likewise. They 
must copy their bill of fare from that of the economical Smith, 
or the Smiths will own the country. They cannot get even with 
Smith by raising larger crops, for the supply is already sufficient 
to satisfy the demand. 

The annual product of labor from year to year cannot be 
saved ; but credits, the result of selling one thousand dollars' 
worth of labor in the market and buying but eight hundred 
dollars' worth, may be preserved from year to year indefinitely, 
and, with the aid of interest, will grow and grow till the wealth 
of a nation is absorbed. Had it occurred to the wily but then 
inexperienced Satan to sell Adam a twenty-five-cent pocket- 
knife, and take his note at eight per cent, compound interest, 
secured by a mortgage on the world, in less than five hundred 
years the debt would have amounted to more than the total 
present wealth of all the nations of the earth ; and, intrenched 
behind the principle so often announced with long-eared 
solemnity, that vested rights must ever be held sacred, the 
devil would now own the world. 

I have endeavored here to illustrate the nature and results of 
an industrial contest between an energetic, economical people 



154 THE DISTRIBUTION OF WEALTH. 

accustomed to mean living, and an equally industrious people 
accustomed to more generous habits of life. When their labor 
is contributed to a common market, and their consumption is 
drawn from the same market, the more generous consumer falls 
behind his meaner competitor, who takes advantage of the mar- 
ket which he supplies, but which he does little to create. 

It is true that it would not be possible to find a community in 
which there are two well-defined classes, such as have been 
described; but the principle has its illustration in many indi- 
vidual instances, which any one may call to mind. It has its 
illustration in the competition between Chinese and American 
labor, in the competition between convict and slave labor with 
free labor, and the cheap labor of the poor with the labor of the 
more thrifty; the parallel effect in the latter cases being 
obscured by the fact that the saving resulting from the small 
compensation of slave or dependent labor, instead of being saved 
to the laborer, is saved to the employer. 

The operation of the principle is also further obscured by 
reason of the fact that the classes who are the most generous 
consumers are generally possessed of a higher degree of intelli- 
gence and skill, by means of which they are raised to a higher 
industrial level, out of contact with the immediate competition 
of the classes who are more meagre consumers. 

Suppose that on the island which has been described, where 
the wages of each worker are rated at three dollars per day, and 
where present labor is equal to the demands of consumption, 
there are introduced three hundred carpenters, who are willing 
to work at the rate of one dollar and a half per day, that 
amount being sufficient to supply their wants according to their 
accustomed mode of living. Both wages and consumption of 
that class of mechanics on the island must fall to a figure ap- 
proximating the lower rate of wages. A like competition in 
any other trade must produce like results. The effect in the 
end is decreased consumption ; an over-suj^ply of labor, since 
there will always be those who desire to increase the amount of 
their consumption above the enforced average ; markets will be 
over-weighted, and yet the wants of the people be unsuj)plied. 

To this will come the ever-ready response that the prices of 
the products of labor fall in the same ratio as the price of labor 



THE DISTRIBUTION OF WEALTH. 155 

falls, and that the purchasing value of a day's wages will 
continue the same. 

But, unfortunately, values do not shrink in the same ratio in 
all departments of labor at the same time. Cattle have been 
very low for years, yet retail prices of beef have fallen but little. 
The fall in prices of wheat are not responded to by a corre- 
sponding fall in the prices of bread at the baker's. Low prices of 
agricultural produce are not soon felt in the reduction of the 
prices of cloth and nails. A reduction in wages is not followed 
by a corresponding reduction in rents. Besides, lower wages 
are often the effect of the introduction of a class of laborers 
whose habits of living have been gauged by and adapted to a 
smaller consumption of the products of labor, and others in the 
same line of employment are thereby compelled to adopt the 
same standard of life. The Smiths, too, are always on hand to 
save money, to store up credits ; and the fluctuating prices and 
the vicissitudes of workers struggling to adjust themselves to 
changing conditions furnish to capital its opportunities. The 
interest-bearing credits of the people of the United States at 
this time are probably not less than twelve billion dollars. A 
debt of one hundred dollars contracted when labor is worth 
three dollars per day does not become a debt of fifty dollars 
when labor is worth but one dollar and fifty cents per day, but 
a debt of 66.6 days' labor ; whereas before it was a debt of only 
33.3 days' labor. 

Mr. Edward Atkinson says, " If our population January 1, 
1885, shall be fifty-eight million, two cents per day profit on 
each person's consumption would be $423,400,000, a sum of 
profits which would set every wheel of industry in most rapid 
motion. Two cents a day loss would bankrupt thousands of 
merchants and stop more mills and works than are even now 
idle." We may draw from this an inference as to the effect of 
fluctuating values resulting from the heated competition of 
seventeen million workers contending against each other in the 
same market. Interruptions and adjustments go on in one con- 
tinuous round, and the wheels of industry are all the while 
more or less clogged. 

The farmer sells five hundred dollars' worth of grain or stock. 
Naturally he would invest this money in clothing for bis family 



156 THE DISTEIBUTION OF WEALTH. 

or in improvements about his dwelling or on his farm. Eut if 
he has two hundred dollars interest to pay on debts, his eon- 
sumption must be reduced in that amount. The mechanic whose 
home is mortgaged and the merchant who is in debt are each 
also endeavoring to save. The creditor who gathers in all this 
interest and principal is able to consume but a small part of it, 
and the result is more sellers than buyers, prices go down till 
consumers are found, credits are swelled in proportion, and the 
aggregation of wealth goes on. 

A fall in prices of the products of any single industry, except 
where such fall is at the expense of an unreasonable margin in 
the profits of capital, breaks the round of production and con- 
sumption, disturbs the equilibrium of the industries, and crowds 
men out of employment. 

While, except as considered in relation to existing indebted- 
ness, a general and uniform fall of prices of all products pro- 
duces no more harmful results than such as flow from the un- 
certainty which always attends a change of money values, the 
change of the relative values of the products of the several in- 
dustries impedes and checks the current of exchange, deranges 
established industrial relations, compels wasteful readjustments 
at the expense of the working-classes, work is suspended and 
men thrown out of employment, but interest goes on and rents 
go on. 

The laborer may not, and generally does not, save the differ- 
ence between the amount he consumes and the value of the 
product of his labor, as determined by the market ; the excess is 
saved and goes to increase the accumulations of the capitalist. 
The saving may be an actual saving in the form of an increase 
of durable wealth, or it may be only an apparent saving, in the 
form of credits, which, like the savings of the Smiths, add noth- 
ing to the nation's wealth, but effect a transfer of wealth from 
one class of persons to another. 

Since, to a people as a whole, the only saving that is possible 
consists in an expenditure of labor in the creation of the more 
durable forms of property, such as machinery, tools, houses, 
furniture, and the like, saving may be said to be a form of ex- 
penditure. Whenever, therefore, there is a general attempt to 
save by checking the current of consumption and piling up 



THE DISTEIBUTION OF WEALTH. 157 

money and credits, the effort defeats the purpose. But when 
money or credits have accumulated in amounts sufficient to in- 
vest in the creation of durable property, if so invested there is 
effected a saving of wealth in the only true sense of the term. 

Should the people consume less expensive food, cheaper cloth- 
ing, and fewer articles of perishable nature, there would be a 
saving of the labor required to produce these things, which 
labor, so saved, might be applied to the creation of durable 
forms of wealth. And here we meet the question. Is there any 
deficiency in the supply of labor which might be so employed ? 
Is there not already an overabundance of unemployed labor, 
which could be used in any channel of industry open ? 

Eeleasing labor from employment and turning it idle on the 
market only creates greater disturbance in values. The saving 
of labor is no advantage except when the labor saved may be 
otherwise usefully employed. But when labor is so abundant 
that the pressing question is. How shall it be employed ? there 
is nothing to be gained by adopting a rye-bread-and-potato diet. 

It is true that, if a portion of what is consumed by some in 
extravagance and waste could be transferred, by some process, 
to those who are in need, a great benefit might accrue to the 
poor without loss to any. The effect, however, — at least the' 
immediate effect, — would be of little value in the adjustment of 
economic forces. 

To the individual, labor saved is so much gained. If one 
person, by means of a labor-saving device, or by superior skill, 
be able to j^erform the work of two men, he receives the full 
benefit of his increased labor. He enjoys an advantage measured 
by the inequality between himself and his fellows. But were 
the capacity of the entire body of American laborers to be sud- 
denly doubled, I much doubt whether any considerable benefit 
or increase of wealth would result in consequence of such aug- 
mented ]30wer. With a proper adjustment of economic forces, 
and with fixed industrial conditions, such increase of power 
might bring great opportunities for leisure and culture, or for 
aimless idleness. Whether the result would be a market at 
frequent intervals choked with an overabundance of the products 
of labor of the kinds now in demand, or whether an improved 
taste might demand other articles of luxury sufficient to absorb 



158 THE DISTRIBUTION OF WEALTH. 

the increased productive power of labor, it might be unprofitable 
to inquire and useless to predict ; but, doubtless, the poor would 
remain, and present extremes of poverty and wealth would 
continue, until a remedy should be found in some modification 
or readjustment of economic forces. 

Eecognizing the necessary limitations on the creation of 
wealth, how is the family of the workingman to be supported 
during sickness or old age, or when by death they are deprived 
of the support of his daily earnings ? By what means shall 
those opportunities for leisure and refined culture, so essential 
to the progress of society towards the higher aims of civilization, 
be supplied to those whose tastes and aspirations fit them to 
lead in that direction ? 

The people of a nation, interchanging the products of labor 
through a common market, constitute a single industrial entity ; 
they form a social compact, with mutual interests and obliga- 
tions that extend through the entire body ; and the advantages 
which accrue are common property, in which each has a right 
to share according to the part which he performs, not only in 
supplying, but also in making the common market. 

The whole people are supported by the labor of a part. The 
old and the infirm, and all the dependent members of society, 
are necessarily supported by the labor of others. This right to 
support, founded in natural law, in the social compact takes the 
form of definite obligation. Let us consider in what manner 
this obligation arises and in what manner it is discharged. 
During the period of the worker's most active industrial life, 
the product of his labor exceeds the amount required for the 
consumption of himself and family. This excess is consumed 
by others, and in consideration of this consumption by others 
he acquires money, or credits, or revenue-bearing property, such 
as railway stocks, mills or houses to rent, or property of like 
character. These constitute the security for his claim against 
society for payment, at some time in the future, in other labor 
products equivalent or more than equivalent to the product of 
his labor that has been consumed by others. His share of con- 
sumption is deferred to old age or to the time when needed for 
the support of those naturally dependent upon his labor, — a 
wife, children, or parents, or others having claims founded in 



THE DISTEIBUTION OF WEALTH. 159 

sympathy or natural obligation. He accumulates wealth for 
future consumption. The course of distribution is extended so 
as to embrace the life of a generation or more. This is a very 
necessary saving for future use, a part of the social scheme, a 
damming of the water till it gathers sufficient volume to 
turn the wheel that moves the machinery of industry. This 
gathered wealth is consumed or distributed; and others, in 
their turn, enjoy like opportunity and advantage. In this 
manner the young and vigorous labor of the country is made 
subject to the burden of providing the support of the dependent 
classes, and secures to itself adequate compensation in the guar- 
antee of an equivalent reward in the future. Every individual, 
in turn, enjoys the same opportunities and the same advantages. 
Civilization is the perfection of the social compact. 

The limitations on the creation and use of property are such 
that the actual accumulations would be insufficient to provide 
for the wants of the dependent classes, and for the necessary 
requirements of society so organized, without the aid of credits. 
It is through credits, stocks, bonds, and mortgages, and their 
hold upon the property of the nation, that the dependent or non- 
producing classes must in a great measure, derive their support. 

If the labor of one man be equal to the production of twice 
the amount required for the present support of himself and 
those dependent upon him, then one-half a lifetime spent in 
active labor would be sufficient to provide for the other half. 
One generation during its period of active labor would support 
two, and the next generation would, in its turn, do the same. 
This is possible, not by means alone of a storage for future con- 
sumption, but in the manner here pointed out. And, while 
debts are not to be invited, credits constitute a useful and very 
necessary factor in our industrial economy. 

When a man has worked half a lifetime, and supported two 
families, or, what is the same, has contributed to the production 
of the country the equivalent of the support of two families, 
socie'ty is in his debt in the amount which the product of his 
labor has exceeded his consumption. The notes he holds for 
money loaned, his railway bonds or bank stock, or other property 
representing bis vested capital, constitute his security for the 
payment of that debt. Through the consumption of himself 



160 THE DISTRIBUTION OF WEALTH. 

and family that debt is discharged, and the property acquired 
or the title represented by the credits he holds passes to the 
next generation, and the process of accumulation and expendi- 
ture is repeated, and so long as society endures must continue. 

The aggregation of capital or wealth to the extent here indi- 
cated is not only beneficial, but necessary. But it bears no 
relation whatever to that unhealthy aggregation that unduly 
absorbs the credits of a country, and deprives the many of this 
opportunity to provide for sickness and age, and for widows and 
dependent children. Large aggregations of capital prevent 
these smaller accumulations, so essential to an equitable distri- 
bution of the common benefits and opportunities which it is the 
purpose of the social compact to create and to preserve, by 
absorbing the fund out of which these small stores of wealth 
must be gathered. 

The money which is paid to the worker in the form of wages, 
or as the price of the product of his labor, is merely a certificate 
that he has contributed so much to the support of society, and 
is, in return, entitled to the product of an equivalent amount of 
labor, valued according to the accepted standard, in whatever 
form he may elect. Money serves the purpose of a medium of 
exchange, — it is a certificate of credit. Labor in the end is paid 
for with the product of other labor, or with land or some of its 
products, which, having been appropriated to exclusive owner- 
ship, possess value by reason of their utility, and of the fact that 
land is limited in quantity. 

A exchanges his labor for the labor of B and C, or for a 
part of the labor of a hundred other persons. This he is enabled 
to do by reason of the intervention of money as a medium of 
exchange. If A has received for his labor one hundred dollars 
in gold, that one hundred dollars represents the promise of 
society, which has consumed the product of his labor, that he 
shall be repaid in the products of other labor of any form he 
may select in an amount representing an equivalent Value. 
Society stands ready at all times to cash its checks with the 
present products of labor. A can have flour, meat, clothing, 
lumber, or the product of the labor of the mechanic, or what- 
ever else he may desire. But A is not ready to receive pay- 
ment. He not only holds the obligation of society which he 



THE DISTEIBUTION OF WEALTH. 161 

has received, good for all time, but he continues to contribute 
his own labor to the common market, which be enjoys but does 
not help to make, and receives more dollars. JS^ow, by tbe de- 
vice of a loan, a note and a mortgage, he converts this money, 
which bears no interest, into an interest-bearing obligation, 
which, by means of interest accumulations, grows and increases ; 
and, instead of the people who consumed the product of A's 
labor paying the obligation given him, by returning a product 
of equivalent value, A's grandchildren will hold railway bonds 
to the amount of five thousand dollars, representing what was 
in the beginning but two hundred dollars and accrued interest ; 
and the people, who had no part in contracting the debt, will 
pay three hundred dollars every year, without in the least re- 
ducing the principal of the debt. It is thus that the people of 
one generation become burdened by the obligations of a past 
generation, and are laid under tribute to aggregated wealth, 
from which there appears no avenue of escape. This trans- 
action of A's is commonly called saving, but, in fact, A did not 
save anything. 

The current of exchange, by which obligations are cancelled 
as they are made, may be thus interrupted by the economy or 
parsimony of a penurious young man, who, like a lodged scow 
in the river of trade, year by year gathers the drifting sand, 
develops into a sand-bar as an usurer, and finally into an island as 
a millionaire. The river shifts its channel to give the island 
room, and the surging current eats into the land along the shore 
and deposits its burden on the island's growing banks. 



THE USE OP LIQUORS AND TOBACCO. 

The value of the manufactured product of tobacco returned 
in the census of 1880 was $119,480,166. The exports exceeded 
the imports to the amount of about twenty million dollars ; so 
that the net product consumed in the United States was about 
ninety-nine million dollars. The internal revenue taxes on to- 
bacco amounted to $38,870,140, which increased the total value 
to $137,870,140. Sixty-four per cent, of this was cigars and 
cigarettes. The total value, as sold at retail, was probably three 
hundred million dollars. 

11 



162 THE DISTKIBUTION OF WEALTH. 

The consumption of liquors in 1880 was as follows : 

Gallons. 

Spirits consumed 63,526,694 

■Wines " 24,162,925 

Beer and ale consumed 444,112,169 

The revenue taxes paid on spirits and fermented liquors 
amounted to seventy-four million dollars. 

These liquors brought at retail, I think, not less than five 
hundred million dollars. Competent authorities estimate the 
amount still greater. The aggregate expenditures in the year 
1880 for liquors and tobacco were probably eight hundred million 
dollars. Of this, maybe one hundred million dollars was neces- 
sary consumption ; but seven hundred million dollars of this ex- 
penditure was not necessary, in the rigorous sense of that term. 
Had the people refrained from the use of these articles to the 
extent of seven hundred million dollars, what would have been 
saved? The total taxes, internal revenue, State, and license, 
probably amounted to one hundred and fifty million dollars. 
This sum would not have been saved, since the people pay the 
taxes to themselves. Of the remainder, thirty-seven million 
dollars went to the tobacco raiser ; twenty-five million dollars 
were paid out in wages to the employes of manufacturers ; eighty- 
six million dollars were paid for materials used in manufacture 
of liquors, part of which went to railway companies and middle- 
men ; fifteen million dollars paid the wages of persons engaged 
in the manufacture of liquors ; and the remainder, three hun- 
dred and eighty-seven million dollars, went to manufacturers, 
transportation companies, wholesalers, and retailers, of whom 
there were sixty-eight thousand four hundred and sixty-one 
saloon-keepers and bar-tenders ; and a large part went to pay 
the rents on buildings used. The saving which would have 
resulted from such reduction in the consumption would be so 
much labor as was required in production, transportation, and 
sale of the product consumed. Another effect would be to de- 
prive capital of inordinate profits derived through this branch 
of industry. After paying for materials used and paying wages, 
capital employed in manufacture retained about sixty-three mil- 
lion dollars. In this amount the profits of capital employed in 
the transportation and sale are not included. The net contri- 



THE DISTKIBUTION OF WEALTH. 163 

bution to capital through the consumption of tobacco and liquors 
probably reached two hundred or two hundred and fifty million 
dollars. 

But there is another consideration of far greater economic 
importance. The expenditures of the working-people for to- 
bacco and cigars are not distributed according to incomes. A 
sj^ends nothing ; B spends ten dollars per year ; C, twenty-five 
dollars ; D, fifty dollars ; E, one hundred dollars ; while F 
spends two hundred dollars per year. Because of acquired 
tastes and fixed habits, these expenditures become in a great 
measure unavoidable ; and the result is that the savings of one 
class of men are all the while transferred to another class, and 
are finally absorbed in the fortunes of the wealthy. The profits 
are enjoyed not by those alone who are engaged in the manu- 
facture and traflSc of these articles, but by every other capitalist, 
whose capital is in a measure relieved from competition by the 
diversion of a part of the capital of the nation from employment 
in other industries. 

From a strictly economic point of view, the chief objection to 
be urged against the consumption of tobacco and liquors is that 
it takes away the margin of savings from the workers who 
habitually use these articles, and is a most effective agency in 
the aggregation of wealth. Strange as it may appear, it is 
nevertheless true that, if the habit of using tobacco and liquors 
was universal, and the expenditure of each individual was, as 
compared with his income, relatively the same as that of every 
other individual, the margin of savings would not be affected, 
except to the extent that labor is diverted from other industries 
where it is needed; and so long as we have so much idle labor, 
it may well be questioned whether the employment of a very 
considerable number of workers in a wholly useless industry 
diminishes either the annual product of durable property, which 
representis the savings of the people, or the products of those 
industries which supply the necessaries and comforts of life. 

The fact that a degree of opprobrium attaches to the sale of 
intoxicating liquors greatly increases the profits of capital in- 
vested in that business. The man who rents a building for a 
saloon demands more rent, and the saloon-keeper secures larger 
profits by engaging in a business that antagonizes public senti- 



164 THE DISTEIBUTION OF WEALTH. 

ment. This unfriendly sentiment, aided by the levy of high 
taxes, has made the manufacture and sale of liquors in some 
degree a monopoly. Capital derives pecuniary benefit and labor 
enjoys the moral results. 

In our great cities, vice in all its forms levies heavy tribute 
upon the earnings of industry ; but at the end of the year, when 
capital balances its accounts, there is always to be found to the 
credit of rent a liberal portion of the tribute gathered. 

Individual economy in expenditure is always and everywhere 
to be encouraged. That condition of society is best in which 
the consumption of each person bears the same relation to his 
earnings as the expenditures of every other person bear to his 
earnings, where each worker who enjoys the benefit of the 
common market for labor contributes his due proportion towards 
sustaining that market, by means of a relatively equivalent con- 
sumption. On no other basis can this condition be so nearly 
reached as on the level of an intelligent, economic, and judicious 
expenditure by each member of society. Parsimony is not only 
a private vice, but a public injury. 

LIMITATIONS ON CREDIT. 

Were the savings, or the accumulations of wealth, of each in- 
dividual represented only by the tangible property owned by 
him, the power to accumulate would be confined within com- 
paratively narrow limits. By the intervention of credits, these 
limits are greatly extended. By means of the employment of 
credits the control and ownership of property may remain with 
A, B, and C, who may be indebted to E in an amount equal 
to half or two-thirds the value of the property they own. In 
this case E may be said, in effect, to own one-half of the prop- 
erty, the title to which is in A, B, and C. A very great pro- 
portion of the accumulated wealth of the people of the United 
States is in the form of credits, which represent actual wealth 
owned and controlled by others. 

Credits are a most desirable form of investment. They bear 
a fixed revenue, fluctuating only within the narrow range which 
measures the fluctuations in the value of the precious metals ; 
when other property depreciates, the value of credits increases ; 



THE DISTRIBUTION OF WEALTH. 165 

they are readily convertible into other forms of wealth, and, in 
the form of notes and bonds, may be borne from place to place 
like money. 

Within the term credits I embrace stocks of r§,ilway com- 
panies, gas companies, and the like, which, in the true sense of 
the word, are not credits, yet since they possess many of the 
characteristics of credits, for the purposes of the j^resent discus- 
sion they may be so classed. The limits of private indebtedness 
are determined by the amount of tangible property in the hands 
of the people, and by the conditions of trade and finance, and 
by the rate of interest. When private indebtedness has become 
so great as to make it difficult for debtors to meet accruing 
obligations, and leads to the enforced sale of property, values be- 
come impaired, the course of trade is interrujDted, the issues of 
business enterprises are made subject to the uncertainty of 
fluctuating values, and industry, in all its forms, becomes de- 
pressed ; under the pressure of enforced collections property 
changes hands at low values, and disastrous panics are liable to 
occur.. Property changes owners, debts are cancelled, the 
volume of credits is reduced, and trade resumes its accustomed 
channels. The net result is always a greater aggregation of 
wealth. While there is no destruction of property, there is a 
temporary depression of values, and a derangement in the rela- 
tion of values, by which many fortunes are swept away, but 
gathered again in larger drifts farther down the stream. 

Except for the accumulation of credits to an amount beyond 
the limit which may be borne under any fairly-regulated system 
of industry and trade, panics could never occur. But when the 
volume of credits has grown so large that accruing obligations 
can no longer be met in the ordinary course of trade, the way 
becomes blocked and panics ensue. 

The growing tendency of credits is described by Dr. Wayland 
as follows : " When men purchase on credit, they draw upon a 
fund which has no definable limits. High hopes impel men to 
extend their purchasing power to the utmost by adding to their 
ready money all the credit they can command. This is the 
point of danger. 

"This element in the market disturbs the equilibrium of 
prices without respect to the true standard ; an artificial de- 



166 THE DISTEIBUnOlS- OF WEALTH. 

mand is created which finds no check, because advancing prices, 
and profits apparently increased, seem to warrant the further 
expansion of credit. 

"Hence comes that excess of speculative purchases which 
Mr. Mill calls the prime cause of commercial crises, and which 
leads to the sudden recoil of prices and consequent collapse. 

" The panic which follows is as rash and unreasoning as was 
the confidence which blew the bubble, and precludes the appli- 
cation of any effective relief 

" The necessity of turning all kinds of property into money 
to meet indebtedness fills the market with sellers, while few are 
ready to buy, and prices sink as far below the standard as they 
were previously raised above it. 

" Then production must be suspended and business stand still 
till adjustments are made and the basis is laid for starting again 
by the true standard, with mutual confidence qualified and 
restored." 

The amount of indebtedness which may be safely incurred by 
a state, or country, or other municipality, depends of course 
upon the limits of the public revenue. The amount of revenue, 
however, which may be raised by taxation from year to year 
depends to a great extent on how that revenue is expended. 
Where the amount collected in taxes is promptly paid out, and 
is at once distributed through the ordinary channels of trade, 
the money paid in taxes serves only as a medium of exchange ; 
and the farmer really pays his taxes in wheat and cattle, the 
carpenter in the work of his trade, and the manufacturer in the 
product of manufacture. Where, however, taxes collected are 
paid out in the form of interest on a public debt, to a creditor- 
class who have no occasion to expend the money so received for 
the products of labor, but who retain it and, as opportunity 
offers, reloan it, perhaps in some distant locality, the round of 
exchange is broken, the money paid in taxes does not soon re- 
turn in response to a demand for the products of the farm or 
the shop, and the tendency is therefore to suspend industry and 
depreciate values. As the public debt is cancelled, private in- 
debtedness takes its place. 

Take for illustration the revenues annually collected and 
expended in payment of teachers in our schools. The money 



THE DISTRIBUTION OF WEALTH. 167 

quickly returns through the channels of trade, without the 
intervention of loans. There is but an exchange of the prod- 
ucts of labor, or an exchange of work ; the round of production 
and consumption is complete. But suppose the amount of 
money which a State pays to its thousands of teachers be paid 
to one individual, what is the effect ? When and how does that 
money return to the people ? The tax is paid in money which 
cannot long be spared ; when will the necessary round of ex- 
change be made complete by a substitution of the products of 
labor which can be spared for the money which cannot be ? 

The amount of revenue which can be raised by taxation, it 
will be readily seen, therefore, depends in great degree upon how 
it is expended. We have here another example of the evil 
effects of the aggregation of wealth. 

The amount of credits floated in the United States cannot 
be very closely ascertained from statistics which have been 
gathered. The following is taken from the census of 1880, 
except where noted as estimated: 

Stock and debt of railways $5,425,722,560 

" " " telegraph companies .... 76,068,747 

" " " telephone " .... 13,723,119 

Loans of national banks 878,500,000 

Private banks and savings banks (estimated) . 1,000,000,000 

Public debt of United States 2,120,415,370 

State and municipal bonded debt 1,117,585,546 

Mortgage indebtedness of the people (estimated) 2,000,000,000 

Other interest-bearing private debts 500,000,000 

Total 113,132,015,342 

From this total should be deducted a considerable sum on 
account of railway stocks included, which yield no dividend. 
And there should be added stocks and bonds of street railway 
companies, gas- and water- works, and other joint-stock com- 
panies. Current credits between manufacturers, wholesalers, and 
retail merchants are not considered. Since 1880 the volume of 
debt has been greatly increased, and of these credits not less 
than eighty per cent, are owned by persons of large wealth. 

In 1870 the total mortgage indebtedness of the people of 
Illinois was $319,864,278. In 1880 the amount of the mortgage 



168 THE DISTRIBUTION OF WEALTH. 

indebtedness was $204,461,364, and in 1887, $416,379,068, an 
increase of over one hundred per cent, in seven years. In 1870 
the farm mortgage indebtedness was $95,721,003, in 1880, 
$103,525,237, and in 1887, $123,733,098. In the I^ovember 
number (1889) of the Popular Science Monthly, Joel Benton 
asserts that the farm mortgages of the Western States amount 
to $3,422,000,000, but gives no authority for this estimate. 

Professor Gleed, in the March number (1890) of the Forum, 
states that since 1870 one Western mortgage broker in Kansas 
has made nearly ten million dollars in the business of handling 
Western loans, and that there are probably two hundred corpo- 
rations now engaged in the business of mortgage brokerage in 
Kansas and Nebraska alone. 

The increase in railway mileage in the United States between 
1879 and 1889 has been over eighty per cent., and there has 
been a correspondihg increase in bank loans. Taking these 
facts as an index of the increase in the amount of stocks and 
credits in the United States, we may safely assume that the 
amount at the present time approximates close to twenty 
billion dollars, or about one-third of the present estimated 
wealth of the nation. 

But of railway stocks there are about two billion four hun- 
dred million dollars that pay no dividend, and nearly five 
billion dollars that pay less than one per cent, dividend. Eail- 
way indebtedness and stock paying a dividend of three per cent, 
and over, at the present time, amounts to about five billion six 
hundred million dollars. 



CHAPTEE YL 

INTEREST ON CREDITS. 

" The tooth of usury must be grinded, that it bite not too much." — Bacon. 

The attitude which writers on economic science in general 
occupy towards the subject of interest is fairly illustrated in the 
comments of Dr. Wayland on usury law. Speaking of laws 
regulating the rate of interest, he says, — 



THE DISTRIBUTION OF WEALTH. 169 

" They violate the right of property. A man has the same 
right to the. market-price of his capital in money as he has to 
the market-price of his house, his ship, or any other of his pos- 
sessions. 

" The real price of capital cannot be forced by law, any more 
than the real price of flour, or iron, or any other commodity. 

" Suppose that to-day money is worth, in the ordinary oper- 
ations of business, ten per cent., and it is worth six per cent, in 
loan. A man will as soon loan as employ it in business, if he 
possesses more than he wishes to use. There will be a fair sup- 
ply of money in the market. But let the profits of capital rise, 
so that in the ordinary operations of business capital is worth 
twenty per cent. If, now, the rate of interest rose with the 
increased rate of profit, the same individual would be as willing 
to loan as before ; and thus, the supply following the demand, 
there would arise no peculiar scarcity. 

" But suppose that six per cent, were the highest legal rate 
of interest, and that he who loaned at a higher rate was liable 
to lose both his principal and interest, and also his mercantile 
character ; in that case, as soon as the profits of capital in busi- 
ness arose to fifteen or twenty per cent., no one, who could thus 
employ it, would loan at six per cent. Hence, the supply would 
be immediately diminished ; and this would, of course, cause a 
greater rise of interest. 

" Such laws can never be enforced. Men in want of money 
will pay what they please for it, and they who choose to pay 
enough can generally borrow. 

"Usury laws offer a premium for the defiance of law, and 
confer a monopoly on unscrupulous extortions." 

John Stuart Mill says, — 

" 'Next to the system of protection, among mischievous inter- 
ferences with the spontaneous course of industrial transactions 
may be noticed certain interferences with contracts. One in- 
stance is that of usury laws. These originated in a religious 
prejudice against receiving interest on money derived from that 
fruitful source of mischief in modern Europe, the attempted 
adaptation to Christianity of doctrines and precepts drawn 
from the Jewish law. In Mohammedan nations the receiving 
of interest is formally interdicted and rigidly abstained from ; 



170 THE DISTEIBUTION OF WEALTH. 

and Sismondi has noticed, as one among the causes of industrial 
inferiority of the Catholic compared with the Protestant parts 
of Europe, that the Catholic Church in the Middle Ages gave 
its sanction to the same prejudice, which subsists impaired, but 
not destroyed, wherever that religion is acknowledged. Where 
law or conscientious scruples prevent lending at interest, the 
capital which belongs to persons not in business is lost to pro- 
ductive purposes, or can be applied to them only in peculiar 
circumstances of personal connection or subterfuge. Industry 
is thus limited to the capital of the undertakers, and to what 
they can borrow from persons not bound by the same laws or 
religion as themselves. In Mussulman countries the bankers 
and money dealers are either Hindoos, Armenians, or Jews. 

" In more improved countries legislation no longer discounte- 
nances the receipt of an equivalent for money lent ; but it has 
everywhere interfered with the free agency of the lender and 
the borrower, by fixing a legal limit to the rate of interest, and 
making the receipt of more than the appointed maximum a 
penal offence. This restriction, though approved by Adam 
Smith, has been condemned by all enlightened persons since the 
triumphant onslaught made upon it by Bentham in his ' Letters 
on Usury,' which may still be referred to as the best extant 
writing on that subject." 

Much has been said on the question whether or not interest 
has any foundation in equity, or whether it is not a payment 
without consideration. There is a theory, presented by Mr. 
Henry George with as much force as by any other writer, rest- 
ing upon the idea that the control which a person may acquire 
over the productive forces of nature confers the right to special 
advantages, which theory is urged in behalf of the claim that 
interest is an equitable charge. Mr. George says, — 

" Suppose I put away wine. At the end of the year I will 
have an increased value, for the wine will have improved in 
quality. Or, supposing that in a country adapted to them I set 
out bees ; at the end of a year I will have more swarms of bees 
and the honey which they have made. Or, supposing that 
where there is a range I turn out sheep, or hogs, or cattle ; at 
the end of a year I will, upon the average, also have an increase. 
Now, what gives the increase in this case is something which, 



THE DISTKIBUTION OF WEALTH. 171 

though it generally requires labor to utilize it, is yet distinct 
and separate from labor. The active power of nature, the prin- 
ciple of growth which everywhere characterizes all forms of 
that mysterious thing or condition which we call Ufe. And it 
seems to me that this is the cause of interest, or the increase of 
capital, over and above that due to labor." 

Mr. George holds, therefore, that the return of an equal num- 
ber of bees or cattle at the end of a fixed period would not be 
sufficient to repay the loan of bees or cattle. This argument is 
based upon the theory that the increased value of the wine, or 
the product of the bees or cattle during the period of loan, ex- 
ceeds the value of labor required to secure the increased prod- 
uct, and the amount of risk of loss from disease or other cause 
incurred by keeping the wine, or bees, or cattle. In other words, 
the claim is made that if A has control of certain productive 
forces of nature, he is entitled, in equity, to receive from society, 
for his labor, an amount equal to that which B receives for his 
labor, and something in addition thereto ; because he is possessed 
of certain property which B does not have. If this be good 
doctrine, it appears to me that the claim of Mr. George, that no 
one has a right to any special advantage growing out of the 
ownership or exclusive possession of land, cannot be well founded. 
I should say that, when a man receives the full value of his in- 
dustry and skill, society is no longer in his debt. 

The increase in the value of the wine, over and above cost of 
storage, attention, and risk, is because society has conferred 
upon capital an interest value. If the rate be six per cent., the 
value of the wine at the end of the year will be increased six 
per cent, above its value a year ago, with cost of storage and 
risk added ; if the rate be twenty per cent., the value of the 
wine will increase in the same ratio. 

If A has an article of property to-day for which he has no 
use, since all property is subject to deterioration in value, to 
decay, or to destruction, it may be greatly to A's advantage to 
loan that property to B, with an adequate guarantee that its 
equivalent will be returned when he may need it. If A is 
compelled to keep on hand all the products he creates, he can- 
not accumulate. A man cannot provide a competence for the 
future by accumulating hogs and cattle. He must find some 



172 THE DISTRIBUTION OF WEALTH. 

one who will take them and return him an equivalent amount 
at some future time. The advantage is more to him who lends 
than to him who borrows. It is by means of credits that a man 
is enabled to continue to produce beyond his present needs, and 
avail himself of the use of his surplus product at any time in 
the future he may desire to do so. 

In order to perfect the method by which this may be done, 
and enable every man to avail himself of the great benefit 
which results from industrial co-operation, money has been in- 
troduced, as a medium of exchange and a medium for the tem- 
porary storage of wealth, during the intervals which must 
elapse between the stages of a completed exchange. For the 
same purpose, and with the further object, among others, of pro- 
viding for the storage of wealth during long periods, credits have 
been introduced. 

The nature of money and its use is such that it is necessarily 
limited in amount. And when any member of the social com- 
pact appropriates the money which he receives in exchange to 
the permanent storage of wealth, — in other words, when he 
hoards it, — he does society a wrong ; but, by reason of his 
power to monopolize the medium of exchange, other members 
of the industrial copartnership may be compelled to pay a 
premium in the form of interest, in order to secure a return of 
that money to its proper uses. The chief factor in determining 
the rate of interest is the monopoly in money. 

A rate of interest sufficient to cover risk of loss, and perhaps 
the trouble that the lender is put to in making the loan, is 
founded in natural equity, and is merely compensatory ; but 
any rate beyond this must find its justification in reasons of 
public policy. 

If the right to interest be founded upon the theory that capi- 
tal is a productive agent or power, then the amount of remuner- 
ation to which capital would be entitled would be determined 
by the ratio of the product to the capital employed. But where 
that ratio is greatest, interest is often the lowest. Common 
observation teaches that the rate of interest is determined by 
the necessities of borrowers, by law, by custom, and by the 
avarice of money-lenders, as well as by the supply of loans'. 
The rate fluctuates from time to time, and varies in different 



THE DISTKIBUTION OF WEALTH. 173 

localities, regardless of any equitable basis. Money, our medium 
of exchange, is made a subject of speculation, like wheat or corn, 
and usury furnishes the inducement. 

Dr. Wayland says that " a man has the same right to the 
market-price of his money as he has to the market-price of his 
house." On the same theory a man would have the right to 
stow away a hundred millions of dollars, and hold it till the 
pressure of the demand was sufficient to force borrowers, whose 
property is jeopardized by the contraction of the circulation, to 
pay such rate of interest as he might choose to ask. Money is 
a limited quantity, and values are gauged by the amount in 
circulation. No man has the right to withdraw it from its 
legitimate uses and convert it into a commoditj^. He may have 
for it the market-price, but society has the right to determine 
the limit which that market-price shall not exceed, without re- 
gard to any considerations other than those which concern the 
people as a whole. Both Dr. Wayland and Mr. Mill speak as 
though, without a satisfactory rate of interest, capital might be 
withdrawn from production. Let us see. Capital consists, 
first, of money. Of this the total amount is not large. Money, 
to a considerable extent, may be hoarded. It then draws no 
interest and commands no profit. If deposited in bank, it is 
loaned. In the Middle Ages hoarding gold and silver was not 
uncommon. There were many reasons for hoarding then that no 
longer exist. But it will hardly be seriously contended that a low 
rate of interest at the present time, with our perfected banking 
system, would lead to a hoarding of money to any serious 
extent. 

Second, capital consists in mills, furnaces, houses, stocks of 
goods, etc. How these can be withdrawn is not apparent. 

Third, capital exists in the form of credits. The amount of 
credits is very large. It must remain in this form, or else it 
must be employed in production by its owners. It becomes at 
once apparent that the existing order cannot be changed. If 
the capitalist who runs an iron-mill in Pennsylvania makes 
gains to the amount of one hundred thousand dollars, for in- 
stance, what will he do with it ? He must put it into more 
miUs, houses, etc., or in credits. If it exists at all, it must exist 
in some form. And, if capitalists do not choose to avail them- 



174 THE DISTRIBUTION OF WEALTH. 

Belves of credits as a means of storage for their wealth, they 
must cease to accumulate, and let go of a large share of what 
they now have. The idea that capital can appear and disap- 
pear at will, like the intangible substance of a ghost, does not 
merit serious consideration. That a low rate of interest will 
tend, in some degree, to lead persons to employ their own capi- 
tal rather than loan it, is true ; and this is one of the reasons to 
be urged in favor of reducing the rate. 

Dr. Wayland speaks of capital being worth twenty per cent, 
in business. At times it is worth more. But is it to be seriously 
urged that the capitalist has an equitable right to appropriate 
the product of labor, in the ratio of twenty per cent, on the 
capital employed, and that a policy of legislation which would 
reduce this profit nearer to an equitable standard is to be con- 
demned as an encroachment on his rights ? 

Finally, we are told that usury laws can never be enforced. 
There is no warrant for this statement. These laws, when 
properly framed, are as effective as other laws. It is true that 
there have been ineffective usury laws, and numerous instances 
of their evasion may be cited. The framing of these laws has 
not always been inspired by an earnest purpose to make them 
effective. But those who have had the opportunity to observe 
the operation of usury laws reasonably well framed with a view 
to enforcement, know that legislation on this subject presents 
no unusual diflSculties. Writers on this branch of the subject 
of political economy have, I presume, copied from each other a 
statement made without adequate investigation. The policy of 
statutory limitations on the rate of interest has been almost 
universally adopted in the United States, and the views gen- 
erally entertained by writers on political economy have not been 
accepted as the basis of legislative policy. The distinction 
between the right to limit the charge for the use of money, 
and the right to limit the charge for the use of a house 
or of land, is based on the peculiar character of money as 
distinguished from other property. 

If A rent a house of the value of two thousand dollars, agree- 
ing to pay therefor the monthly rental of twenty dollars per 
month, he acquires the use of two thousand dollars' worth of 
property. If he borrows two thousand dollars, and agrees to 



THE DISTRIBUTION OF WEALTH. 175 

pay for the same two hundred dollars per annum, in this case 
also he acquires the use of two thousand dollars' worth of prop- 
erty for a stipulated consideration. In the one case the law 
does not interfere. The contract for rent is enforced without 
regard to whether the charge be reasonable or extortionate. 
But if A engage to pay for the use of money more than a cer- 
tain prescribed interest, the law not only refuses its aid in 
enforcing the agreement, but also subjects the lender to the 
penalty of a forfeiture of all interest. The parties in either 
case being equally free to contract, why does the law interfere 
in the one case and not in the other ? 

In the first case, A hires a house ; when the term of his lease 
has expired he may surrender the house. He incurs no pecu- 
niary obligation for the principal sum involved. When he has 
surrendered the property and paid the rent his debt is cancelled. 

But when A borrows two thousand dollars in money, the 
money does not remain in his possession. Money, to be used, 
must be spent. It is invested in other property and made sub- 
ject to the contingencies of commerce ; through fluctuations in 
value it may be lost, and, when the time for payment of princi- 
pal and interest arrives, A's ability to pay may be contingent 
upon his success in trade or his ability to sell property at fair 
values. In the mean time values may have changed, or the 
market may have become stagnant, and sales may be impracti- 
cable. A being unable to pay the debt when it matures, the 
loan must be renewed or replaced by other loans at a higher 
rate of interest, perhaps, and the final result may be an unforeseen 
sacrifice of A's property. 

Eent is discharged in the ordinary course of current expendi- 
ture. The amount bears a definite relation to the renter's 
income, and no liability is incurred which may involve him in 
unforeseen financial embarrassment. At the end of the month or 
the year he may surrender the property, and rent other property 
at a lower rental, if circumstances require that he should do so. 

Pressed by necessity, or encouraged by hopes of profit in 
business which often prove delusive, the majority of borrowers 
are ever ready to pay a higher rate of interest than they can 
afford. The number of borrowers is great, and competition is 
strong; while the hoarded wealth of the country is in relatively 



176 THE DISTRIBUTION OF WEALTH. 

few hands, and competition among those who loan is compara- 
tively weak. They are not pressed by any peremptory necessity ; 
they may await opportunity, and often profit most by the mis- 
fortunes of others. The rate of interest, when not restrained by 
usury laws, finds its only effective limitations in the ability and 
disposition of the workers to narrow the general margin of 
profits which represent the annual contribution of labor to 
capital. 

I do not contend that the law should not, under any condi- 
tions, place limitations on rent. Eents tend everywhere beyond 
the limit of equitable charges. I am disposed to question the 
claim of capital to profits on any ground other than that of 
public policy and the social utility of reasonable accumulations 
of wealth. They are an industrial necessity, and afford a prac- 
ticable means for utilizing the social and industrial energies of 
the people. 

The details of every commercial transaction cannot be sub- 
jected to rules defined by legislative acts. The law should 
interfere only where it is practicable to accomplish results fully 
adequate to compensate for whatever inconvenience or sacrifice 
of individual freedom, or other evil, which the operation of the 
law may occasion. Otherwise, the remedy may be worse than 
the disease. 

Ordinarily, the determination of values must be left to the 
law of supply and demand and to the contracting parties. 
There are, however, many recognized exceptions : charges for 
railway transportation, ferriage, hack-fare are recognized as sub- 
ject to legislative control. The law of supply and demand is 
not in such cases fully operative. The subject here is, in its 
nature, such that it may be brought under the operation of 
legislative restrictions. Legislation is justified because it is 
practicable. 

Ordinarily the field is left to the law of supply and demand, 
not because this law always fixes just prices, but because, in 
general, it secures a nearer approximation to equitable prices 
than is attainable by the operation of any law which could be 
formulated in a statutory enactment. 

When the law of supply and demand is, from any cause, not 
reasonably effective to prevent extortion, then the government 



THE DISTRIBUTION OF WEALTH. 177 

is justified in interferiDg, if in such case it be practicable to 
secure equitable results by means of legislation. The question 
then becomes one of policy and not of right. Government 
Interference is in itself an evil. Legislative laws are clumsy 
remedies, and liable not only to fail in the accomplishment of 
the results aimed at, but also to produce unlooked-for effects not 
less injurious to society than the evils sought to be repressed. 
Commercial intercourse ought to be left as free from restraint 
as possible. The advantages which one man may obtain over 
others by reason of superior energy, skill, or foresight, or even 
by deceit, within certain limits, the law wisely permits. The 
jostling of the crowd cannot be prevented. In the great strug- 
ling mass of humanity, where the people are all endeavoring to 
climb on top of one another, the law cannot always keep the 
strong from trampling upon the weak, but it may impose re- 
straints and establish limits. 

Limitations upon rent-charges would involve a question as to 
the value of each lot or tract of land rented. There being no 
uniform standard for determining that value, every case of 
renting would involve an appraisement of value by some au- 
thorized agent of the government, and values being a matter 
of opinion, fluctuating and uncertain, a law limiting rent-charges 
would not only involve unusual difficulties in its enforcement, 
but would fail in its purpose of uniformity of price according to 
values. 

In regulating interest-charges neither of these difficulties is 
met with. Usury laws are practicable and easily enforced. 
They are uniform in operation and certain in their effects. A 
law liuiiting the price of clothing or of provisions tends to di- 
minish the supply. A law limiting rate of interest does not 
tend to diminish the supply of capital, except where the law is 
of local application. In the followiug States there is no limit 
on the rate of interest which may be reserved by contract: 
California, Colorado, Maine, Massachusetts, [N'evada, and Ehode 
Island. In Arkansas, District of Columbia, Iowa, Michigan, 
Minnesota, Mississippi, Missouri, Nebraska, Oregon, South Caro- 
lina, and Wisconsin the limit is ten per cent. In Kansas and 
Texas the limit is twelve per cent. In Alabama, Georgia, Illi- 
nois, Indiana, Louisiana, J^orth Carolina, and Ohio the limit is 

12 



178 THE DISTEIBUnON OF WEALTH. 

eight per cent. In Connecticut, Delaware, Kentucky, Mary- 
land, New Hampshire, New Jersey, New York, Pennsylvania, 
Tennessee, Yermont, Yirginia, and West Yirginia the limit is 
six per cent. The laws of each State prescribe a legal rate to 
govern in cases where no specific rate is fixed by contract. 

The right of the government to limit the rate of interest 
which may be collected, and the sound policy of legislation pre- 
scribing limitations on charges for the use of money being con- 
ceded, we come to the question, what rate should be permitted ? 

This inquirj' involves the consideration not only of the ques- 
tion what rate of interest can A, B, and C afford to pay, or 
what are the average returns of capital, but how is society in 
general affected by interest-charges ? What does interest have 
to do with the great economic problem, the distribution of 
wealth? If the effect of a high rate of interest does not extend 
beyond the borrowers, society is not so deeply concerned ; but 
if the effect extends to the whole people, directly involving the 
welfare of the entire working population, there is then a potent 
reason for the enactment and enforcement of laws limiting 
interest to a low rate. 

The functions of money are, first, to afford a definite standard 
or measure of values ; second, to supply a medium by which the 
exchange of other property may be conveniently effected ; and, 
third, to afford a medium for the temporary storage of wealth. 

To illustrate the use of money, as well as the dependence of 
labor upon capital, let us suppose the existence of a community 
under the conditions here described. Severed from all connec- 
tion with the world of commerce, there is a community con- 
sisting of one thousand workers and their families. This com- 
munity is in possession of all kinds of modern tools, devices, 
and machinery, and each industry is supplied with a due pro- 
portion of workers. There is convenient access to all the ma- 
terials for production. All property is owned in common, and 
each worker willingly performs his part. The capacity to pro- 
duce has reached that point where the labor of eight hundred 
workers out of the one thousand is adequate to the production 
of every species of property ordinarily consumed "by the whole 
community. The excess of capacity is, therefore, equivalent to 
the labor of two hundred out of the one thousand workers. 



THE DISTEIBUTION OF WEALTH. 179 

But the dwellings of the people being poor, they desire better 
houses. They therefore propose the erection of a house of 
the value of one thousand dollars for each family. The pro- 
ductive value of a day's labor, measured in dollars, is equivalent 
to 1.66f. There are three hundred working-days in a year. 
Two hundred laborers working three days each perform six 
hundred days' labor, the equivalent of one thousand dollars. 
In three days, therefore, the two hundred workers will build one 
house of the value stated, in one year they will build one hun- 
dred houses, and in ten years they will build one thousand 
houses, or one house for each family. In the work of building 
are embraced the furnishing of materials and every stage of 
preparation. As everything is owned in common, the workers 
and their families are all the while supported out of the common 
fund, and no money is needed. As a result, we have in ten 
years the production of one hundred thousand dollars' worth of 
property in excess of consumption, and an equal distribution of 
the product. 

In this scheme I have not overestimated the productive ca- 
pacity of labor nor the excess of unemployed labor. In a com- 
munity so organized, if such organization were practicable, 
money would be unnecessary, and gold and silver, except as 
useful in the arts, would be of no more value than in a commu- 
nity of beavers, that, without machinery or tools other than 
their teeth and tails, without any medium of exchange and 
without credits, manage to accumulate considerable wealth, 
without producing either millionaires or tramps. 

But, assuming the same conditions, except as to community 
of goods, money or some substitute for money becomes neces- 
sary. Houses are wanted. There is a surplus of labor sufficient 
to build them at the rate described. There is money enough in 
the community to answer the purposes of exchange, but it is 
equally distributed, each of the one thousand workers having 
twenty dollars and no more. It is plain that no man can enter 
upon the construction of a house that will cost one thousand 
dollars with only twenty dollars at command. Each member 
of the community is already supplied with his ratable portion 
of the property of the whole community. There is a continual 
exchange of the products of labor which are consumed, and the 



180 THE DISTKIBUTION OF WEALTH. 

equilibrium of wealth is all the while preserved. But A de- 
sires to build a house worth one thousand dollars ; how shall he 
proceed ? A has some property, but only such as he requires 
for his own use, and every other family is equally well supplied. 
If he would sell what he has, there are no purchasers. 'No one 
buys property to rent, because there are no renters. No man 
uses the property of another, and there can be no aggregation 
of wealth in the ordinary way. If A borrows the one thousand 
dollars in small amounts from each worker, how will he be able 
to repay it ? He must do so out of the product of his labor ; 
but the labor of each individual being sufficient for his support, 
though A can, during a year, perform one-fifth more labor than 
is required for his support, the equivalent of sixty days, or one 
hundred dollars, and in ten years he could repay the one thou- 
sand dollars ; yet, there being no market for extra labor, the 
way is blocked. But, if every other man will, during the ten 
years, build a house of the value of one thousand dollars, there 
will then be a market for the surplus labor at its full value. 
But, since it is probable that three-fourths of the people will be 
satisfied with the houses they have, considering that economy 
consists in spending as little as practicable, no market is fur- 
nished for the extra labor. 

The foregoing illustrates the condition of completed develop- 
ment reached by old communities, called by writers on political 
economy the stationary state, and shows why, with an abun- 
dance of labor at command, people continue to live in poor 
houses, without the luxuries, and often without the comforts, 
of life. The exchange of labor is limited, not only by economic 
conditions, but also by the disposition and habits of the people. 

Now, suppose that in the community of which we have been 
speaking the governing power, by means of taxation, collects 
from each of the one thousand workers one dollar, and builds a 
house ; then in the same manner collects another one thousand 
-dollars and builds another house, and so on for ten years, util- 
izing all the excess of labor. Now, at the end of the ten years, 
the people have one thousand houses, have all the money they 
had before, and no more, and in the mean time they have en- 
joyed all the comforts and luxuries of life to which they were 
accustomed. 



THE DISTRIBUTION OF WEALTH. 181 

We have supposed one case in which the houses were built 
without money, and another in which money was employed 
much the same as bills of exchange are used. In either case 
the same results are accomplished by the same amount of labor. 
In the latter case, instead of using gold and silver, the govern- 
ment might have resorted to certificates of credit, or fiat money, 
with the same results. 

The principle here illustrated is the same as that which un- 
derlies the success of building and loan associations. The effect 
of these associations is, first, to encourage the saving of money 
by furnishing an inducement by way of opportunity for imme- 
diate investment, and by supplying the stimulant which springs 
from the concert of many persons together pursuing a common 
purpose ; and second, and herein lies the chief value of these 
associations, by furnishing a market for labor. A cannot build 
unless he can exchange his labor for the labor of others, and in 
this manner pay the cost. He cannot exchange his labor unless 
there be others who desire to build also. It is true that the 
round of exchange is not confined to building alone ; all occu- 
pations are brought within the circle of exchange. But the 
principle illustrated is fully operative, and the building effected 
by the agency of these associations is largely the product of 
labor that would have been otherwise unemployed, — an addition 
to what would have been the product of all the industries had 
this work not been performed. No more successful agency for 
the distribution of wealth has ever been devised. Thousands of 
workingmen have secured homes of their own, while thousands 
more have derived advantage in the way of reduced rents. 

These associations should be confined within the scope of their 
original design, and should not be made a mere medium for the 
purpose of loaning money. Aggregated capital should not be 
permitted to utilize these organizations of wage-earners for the 
purpose of absorbing the earnings of the people by an extension 
of credits. The way is open for the profitable investment of 
capital ; the people may not be quick to discern the danger, and 
legislatures should be prompt in surrounding these institutions 
with the necessary safeguards to prevent the intrusion of ag- 
gregated wealth into this field of investment. 

It is evident that money produces nothing. A may collect 



182 THE DISTRIBUTION OF WEALTH. 

together one hundred thousand dollars in money. That money- 
represents so much stored wealth, and, for the purpose of trans- 
fer and of the temporary storage of wealth, money is convenient 
and necessary. But if A locks that money in his safe for 
months or years, he does society an injury. In equity he has 
no right to hoard it. To do so is to divert it from its legitimate 
use. Society is entitled to it, and that, too, without paying a 
premium on its use. If A does not desire to exchange it for the 
products of labor, society is entitled to that money without in- 
curring any obligation other than for the return of a like sum 
when A may require it for the purpose of expenditure. If, 
then, A loans the money, he is entitled, first, to compensa- 
tion for any risk of loss he may incur ; and, second, to compen- 
sation for the work, care, and skill required in loaning and 
collecting it. To anything more he has no claim, except upon 
the ground of public policy, which, for the general good, per- 
mits and encourages, within proper limits, accumulations of 
wealth beyond the actual earnings of any individual worker. 

But a question of this character must be considered in its 
practical bearings, and not alone from the stand-point of abso- 
lute equity as involved in a particular transaction. 

At three per cent., any sum, at compound interest, will double 
itself in twenty-three years and one hundred and sixty-four 
days. At four per cent., any sum will double itself in seventeen 
years and two hundred and forty-six days ; at five per cent., in 
fifteen years and seventy-five days ; at six per cent., in fourteen 
years and three hundred and twenty seven days; at seven per 
cent., in ten years and eighty-nine days ; and at eight per cent., 
in nine years and two days. 

At three per cent, compound interest, in ten years one thou- 
sand dollars will amount to one thousand three hundred and 
thirty-one dollars and thirty-five cents. In other words, the 
savings of one thousand dollars at three per cent, compound in- 
terest, in ten years amount to three hundred and thirty-one 
dollars and thirty-five cents ; and at three per cent, simple inter- 
est to three hundred dollars. 

The census reports of 1870 and 1880 show that the entire 
savings from the labor product of the whole people amount to 
less than ninety dollars per capita. This would make the sav- 



THE DISTRIBUTION OF WEALTH. 183 

ings to each average worker equal to two hundred and seventy 
dollars in ten years, supposing the increase of wealth to be 
equally distributed and the whole amount to be credited to 
labor. But, since, as I have already shown, more than the 
amount of increase in wealth has been absorbed by capital, and 
nothing is left to the account of labor, the account stands thus : 
Average savings for one laborer in ten years, nothing; savings 
of one thousand dollars in ten years at three per cent, interest, 
three hundred and thirty-one dollars. There are no statistics 
which furnish the data necessary to determine the total of the 
interest -bearing credits of the United States; but the amount 
will at the present time approximate the sum of fifteen billion 
dollars, which, at six per cent., would in ten years, at compound 
interest, amount to twenty-six billion seven hundred and ninety 
million dollars, — a gain of eleven billion seven hundred and 
ninety million dollars. At three per cent, compound interest 
the gain would be four billion nine hundred aod sixty-five million 
dollars. It is true that a considerable portion of these credits 
do not constitute a part of large fortunes ; but two-thirds of the 
whole amount may be set down to the credit of unduly aggre- 
gated wealth. It will be seen that interest is a most potent 
factor in the aggregation of wealth, — a power, in the presence 
of which labor is absolutely helpless. It is true to-day, as of 
old, that " to him that hath shall be given, and he shall have an 
abundance ; while from him who hath nothing, shall be taken 
away that which he already hath." 

There is another effect of interest not yet considered. The 
rate of interest is everywhere accepted as a measure of the 
profits of invested capital. When money is worth eight per 
cent., it will not, as a rule, be invested in any business with a 
prospect of lower profit. If A has a house to rent which rep- 
resents two thousand dollars of invested capital, the rent is 
fixed on the basis of the rate of interest which money will com- 
mand. A says this house is worth two thousand dollars ; eight 
per cent, on two thousand dollars is one hundred and sixty 
dollars, therefore I must have one hundred and sixty dollars 
per year, and enough more to cover taxes, cost of repairs, the 
annual wear and tear of the property, and something more for 
the trouble of looking after the property, collecting rents, etc. 



184 THE DISTRIBUTION OF WEALTH. 

If money was worth but three per cent., sixty dollars would 
take the place of one hundred and sixty dollars in determining 
the rental value. The manufacturer makes the interest value 
of money the basis of his calculations in estimating the profits 
which he must derive from his investment. That a certain 
equilibrium will always be preserved between the interest value 
of money and the profits of invested capital is too evident to re- 
quire elaborate illustration. The enforced reduction of interest 
throughout the entire country would tend to a large reduction 
of the profits on invested capital and effect a wider distribution 
of wealth. Grreater steadiness would be given to values, specu- 
lation would be largely eliminated, the burdens of labor would 
be lightened, the tightening grasp of capital on the productive 
forces of the nation would be relaxed, and the savings of the 
people, instead of beiug rolled into the fortunes of millionaires, 
would be distributed among the workers. 

Mill says, "The price of land, mines, and all other fixed 
sources of income depend, in like manner, on the rate of interest. 
Land usually sells at a higher price, in proportion to the income 
afforded by it, than the public funds. . . . When interest is 
low, land will naturally be dear; when interest is high, land 
will be cheap." 

This is true. Land being a fixed quantity, the ownership of 
land constitutes a monopoly ; and in a country like England, 
where the area is fully occupied and cultivation has reached 
near the limit of power to produce, and the agricultural product 
cannot be increased by the employment of additional capital, 
the reduction of the rate of interest will effect an increase in the 
money value of land, and will not tend materially to reduce rent 
or the value of agricultural product. In the United States, 
however, where there is room for the abundant increase of 
capital in agriculture, the rule does not hold good. The ten- 
dency here would be to reduce rent wherever it is excessive, as 
compared with other values. But when in this country, as in 
England, the limit of the possible agricultural product is ap- 
proximated, agricultural values will be pressed upward, and 
will require tbe restraint of foreign competition and statutory 
limitations on the ownership of land. Whenever there is a 
monopoly in any form of production, prices are, in a great 



THE DISTRIBUTION OF WEALTH. 185 

measure, released from the effect of the laws of competition and 
from the economic forces to which other industries are subject. 
But in any case a low rate of interest tends, after a certain 
point has been passed, to reduce rents. Since the overflow of 
accumulated capital must be invested in the competing indus- 
tries, and the general tribute which labor pays to capital is 
reduced, the portion appropriated to wages or earnings of labor 
is therefore greater, and average wages must be higher. From 
the indirect or secondary effects of a low rate of interest, rents, 
though intrenched behind the power of monopoly, cannot 
escape. 

It is not necessary, and perhaps not advisable, that interest 
on all classes of loans should be limited to the same rate. 
Where loans are secured by mortgages on real estate estimated 
at a fair valuation, the danger of loss is reduced to a minimum ; 
and, except for the fluctuations in value, caused chiefly by the 
pressure of aggregated capital in pursuit of illegitimate profits, 
there need be no danger at all. The lowest limit may therefore 
be fixed on loans of this character. In commercial transactions, 
where the only security is the continued personal responsibility 
of the makers and indorsers of commercial paper, the rate might 
be somewhat higher, but the margin of difference should not 
exceed one or two per cent. The policy of the law should be to 
discourage speculative enterprise and to favor steady values. 
Traders burdened with heavy interest obligations are always 
under the spur of the necessity to make large profits, and 
thereby become the natural enemies of the workers, whose share 
of the product diminishes in the same ratio that profits increase. 

Since the chief objection to a high rate of interest is founded 
upon the fact that interest is one of the principal agencies 
through which aggregated capital in the hands of a small 
number of persons absorbs the earnings of the people, the 
reason for prescribing a low limit does not hold with the same 
force where the lenders of money are persons of small means. 
It is, however, ordinarily impracticable to distinguish between 
lenders, and all must come within the operation of the same 
rule, unless special conditions shall furnish the opportunity to 
discriminate. 

Building and loan associations — institutions which are co- 



186 THE DISTRIBUTION OF WEALTH. 

operative in character — have for several years been in effective 
operation in almost every city and important town in the 
country. No plan has been hitherto devised by which working- 
people could combine their small savings so as to secure the 
necessary capital to employ labor in constructive industry 
where only considerable sums are available. The savings of 
workingmen are too small in amount, too slow in accumulation, 
to be available for the purpose of building a home or other in- 
dividual enterprise. The organization of building and loan 
associations has furnished workingmen the opportunity to co- 
operate, and, by means of combination, to utilize their own 
labor in building homes, without at the same time being com- 
pelled to abstain from the enjoyment of the usual comforts of 
life. 

How many families there are, who are now living in com- 
fortable homes of their own, who, except for these associations, 
would be paying rents, statistics do not inform us. The number, 
however, is very large. The law has not provided for statistics 
upon this subject. The curiosity of the National Bureau of 
Statistics has not yet been sufficiently awakened on the subject 
of the progress of the workingman to divert its attention, except 
during periods of leisure, from the task of counting the people 
and summing up the wealth of the nation. However, from the 
statistics of the St. Louis building associations, just at hand, we 
may gather an idea of what has been done. There are in St. 
Louis one hundred and five associations, averaging two thousand 
members each. The monthly dues amount to two hundred and ten 
thousand dollars. The interest paid on loans averages five and 
one-half per cent. At the date of the July statement the loans 
amounted to five hundred and eighty-two thousand two hundred 
and ninety-one dollars, and were increasing at the rate of two 
hundred and ten thousand dollars per month, making the 
volume of loans, December 1, 1889, about ten million dollars. 
The average building society loan in St. Louis is two thousand 
six hundred dollars. This would give three thousand eight 
hundred and thirty-eight houses. The monthly savings amount 
to two hundred and fifty-seven thousand seven hundred and 
fifty-one dollars. These results have been accomplished within 
five years. In these associations for mutual benefit the interest 



THE DISTRIBUTION OF WEALTH. 187 

accumulations are distributed on an equitable basis among the 
stockholders through whom they are derived, and serve merely 
to equalize the advantages of the early and later borrowers. 
An interest of six or even eight per cent, is not open to serious 
objection. 

These associations are most effective weapons against the 
power of aggregated capital. They should be conducted in the 
interest of the working-people, and should not be given over as 
a field of investment for accumulated capital. If these organi- 
zations are continued, and in their operations confined to the 
purpose of promoting the interests of the working-people, they 
will soon be released from monthly tribute, in the form of rent, 
to aggregated wealth. 

The residence and business real estate, including water-power, 
in the United States in 1880 was estimated at nine billion eight 
hundred and eighty-one million dollars. In this valuation land 
is included, which Mr. Atkinson estimates at from one-half to 
two-thirds the value of the whole. The value of dwellings 
alone probably did not exceed four billion dollars, or about 
eight-fifteenths of the annual product. The average life of a 
dwelling is not less than forty years ; certainly not less if we 
allow for the greater value of the more durable ones. Five per 
cent, of the annual product is sufficient to duplicate these build- 
ings in ten and two-thirds years; one and one-third per cent, 
will duplicate them in forty years. It is apparent, therefore, 
that in a short time a steady diversion of a very small per cent, 
of the labor of the country to the construction of dwellings 
would, if equitably distributed, supply the people with good 
homes of their own. And to three-fourths of the people of a 
country a good home and its furnishings must, in the nature of 
things, constitute the limit of individual wealth. 

In order to secure the necessary diversion of labor to the 
creation of this form of durable property, in which the product 
of labor may be saved or preserved in continued use during a 
longer period than in any other form of product, and in which 
form it therefore yields a greater measure of comfort than in 
any other, railway freights on building materials should be 
limited to actual cost of carriage ; capital invested in railways 
should derive its profit out of charges for the carriage of freights 



188 THE DISTRIBUTION OF WEALTH. 

not so directly associated with the savings of the people ; build- 
ing associations should be encouraged, and new dwellings occu- 
pied by the owners should be exempted from taxation during a 
reasonable period. The policy of the law should be such as to 
encourage saving, — that is, the conversion of labor into durable 
property and the wider distribution of its ownership. Saving 
in the other sense of accumulating credits or revenue-bearing 
property, more properly described as the centralizing of capital, 
needs no encouragement. 

This plan of co-operation, employed by building and loan 
associations, with such modification as experience may suggest, 
may doubtless be extended along other lines, in effective compe- 
tition with accumulated individual wealth, thus opening the way 
for a practical solution of the greatest problem of the age, — the 
equitable distribution of the products of industry and the steady 
employment of labor. 

The question naturally arises, If interest be reduced to a low 
rate and profits on invested capital be cut down, how shall 
adequate provision be made for the dependent classes who now 
rely upon the returns of a small amount of capital ? How shall 
men no longer able to work, widows, and children derive their 
support ? 

The answer is that a wider distribution of wealth will multiply 
the number of small fortunes. The number of those who now 
are able to acquire a competence is comparatively small. 

It is better to extend to the workingman an opportunity, 
with reasonable exertion, to acquire a small store of wealth 
which may constitute a fund for the support of himself in sick- 
ness, and of his family, in case by death or otherwise they 
should be deprived of the proceeds of his daily labor, than to 
pursue a policy which, while it may enable a few who may be suc- 
cessful under adverse conditions in accumulating wealth, to pro- 
vide what will be a more adequate support for those dependent 
upon them, prevents the majority from making any provision 
at all, beyond a few months' subsistence for those dependent 
upon their industry. And, besides, women and children make 
their way far more readily in a community where labor receives 
its just rewards, than in a community where the earnings of 
the workingman are absorbed by exorbitant interest, rentsy and 



THE DISTRIBUTION OF WEALTH. 189 

profits, and where employment is rendered uncertain by harsh 
conditions prescribed by the exacting demands of capital unre- 
strained by the power of organized labor. 

But I believe the government, as the representative of com- 
mon interests, as the agent of the social and industrial compact, 
may well extend its functions in behalf of the dependent classes. 

Suppose the State or national government should issue bonds 
bearing an annual interest of six per cent., or eight per cent., or 
ten per cent., made paj-able to individuals by name, in amounts 
not less than one hundred dollars nor more than three thou- 
sand dollars, these bonds to be issued only to dependent classes, 
such as widows and children left with estates under the value 
of, say, five thousand dollars, or such other sum as might be 
thought a suitable limit, and payable, if to guardians of 
children, when the ward should attain the age of twenty years, 
or if to widows, on remarriage, and under the direction of 
courts of probate, and through the agency of banks, let the 
money of these dependent classes be invested in these bonds, 
what reasonable objection could be urged? The benefits of such 
a provision might be extended to other dependent classes. The 
money so received could be used by the government as other 
funds, and replaced out of the ordinary revenues. 

Or, in lieu of the foregoing, a certain amount of railway bonds 
might be set apart for this use, and if all workingmen whose 
accumulations have not exceeded a certain amount were em- 
braced within the scope of the policy here indicated, such meas- 
ure would greatly tend to reduce inequalities in distribution 
which result from undue aggregations of wealth. The discrimi- 
nation here suggested would be a discrimination, not between 
individuals, which would be unjust, but between fortunes, which 
would be both just and practicable. The bonds might be made 
to bear such interest above the ordinary rate as the State should 
by law determine, payable out of the earnings of railways, which 
are in the nature of a tax upon the industries of the country, 
the weight of which rests upon the whole people alike. 

This plan would encourage saving among the common people 
by holding out a special inducement, and the rate of interest 
would be little more than that which the people at large, through 
the agency of individuals, now pay to those who are already in 



190 THE DISTEIBUnON OF WEALTH. 

possession of vast fortunes ; for the interest paid by individuals, 
where it goes to swell tlie already overgrown aggregations of 
wealth, is, in effect, paid by the working-people at large. 

By this method, to the extent that it should be employed, the 
people, as a whole, would become the borrowers. They would 
pay interest, not to capitalists who would reloan it, but to con- 
sumers ; they would therefore pay it in the products of present 
industry, and the burden would be unfelt. 

If, during the last five years, there had been deducted from 
the total product of American industry a sufficient amount to 
adequately feed, clothe, and house five hundred thousand of the 
poorer classes in this country, and this amount had been con- 
ferred upon them as a gift, the American people would have 
suffered neither diminution of wealth nor deprivation of the 
comforts or luxuries which they have enjoyed. A burden of 
expenditure resting upon the whole people, so adjus.ted as to bear 
equally upon all, is not felt. It is derangement of the industries 
and imperfect distribution that is the cause of suffering and 
want. 

The functions of the State might be still further extended. 
If the interest on loans secured by real estate be limited to three 
per cent., the State might itself become a borrower, issuing 
bonds in sums of fifty, one hundred, two hundred, and three 
hundred dollars, and so on, and reloaning the funds so received 
at the rate of three and one-half per cent., payable semi- 
annually, secured by mortgage on real estate, the amount loaned 
not to exceed two-thirds the value of the security. And the 
State might, at the same time, become an insurer of the build- 
ings on the real estate so mortgaged. In Germany a plan of 
government insurance has long been in operation, and I see no 
practical difficulty in the way of the government performing 
this service. In England the cost of insurance is little more 
than one-fourth the cost in the United States, the ratio being as 
25 to 90. The losses paid in the United States average a little 
more than two-thirds of the amount of the premiums paid, 
indicating large expenses, as well as large profits, to insurance 
companies. 

This plan would greatly narrow the field wherein aggregated 
wealth now gathers its profits. 



THE DISTEIBUTION OF WEALTH. 191 

This would not accord with the theories of political econo- 
mists, of whom Professor Cairnes says their " decrees, ordinarily 
given to the world in the name of political economy, amount, 
in the main, to a handsome ratification of the existing form of 
society as apparently perfect ;" but, without any violent de- 
parture from the existing order, would afford a practical test of 
the principle of industrial co-operation, under conditions favor- 
able to success. Many States have adopted the policy of ac- 
cumulating funds for educational purposes, and loaning them to 
citizens through oflScial agents, and I have not learned that 
any but good results have followed the experiment. So long as 
the interest should be paid, the State would be under no 
necessity of requiring the principal, and depression of values occa- 
sioned by forced collections would not occur. The borrower 
might be permitted to repay his loan in instalments of, say, 
fifty dollars at any time ; and the collections over the State 
would be suflSciently uniform in volume, so that the amount — 
which need not be large — necessary to be kept on hand to meet 
current demands could be readily determined. 

The plan suggested involves no complex system of accounts^ 
no necessary increase in the number of officials, no higher order 
of skill than that required by the duties of county officials at 
present, and need involve no considerable additional exj)ense. 

The adoption of a low rate of interest would involve the 
necessity of relieving credits from taxation. The tax on credits 
is a double tax that has no equitable basis and cannot be justi- 
fied on the ground of public policy. This subject is discussed in 
the chaj)ter on taxation. 

I am aware that a low rate of interest, unless supplemented 
by some limitations on the ownership of real estate, while it 
would check, would not prevent a ra]3id growth of aggregated 
wealth. There must be some outlet for the overflow of profits 
which capitalists and their families are unable to consume, for 
profits must come within the limit of opportunities for invest- 
ment. When interest is materially reduced, surplus capital will 
begin to absorb the real estate of the country at a far more 
rapid rate than now. High rates of interest, combined with the 
unprofitable condition of agriculture, have caused investments 
to take the form of mortgage-loans; but, when driven out of 



192 THE DISTEIBUTION OF WEALTH. 

mortgages by a reduced rate of interest, capital will burrow in 
the earth. Even now, in the most productive counties in the 
comparatively new State of Illinois, from one-half to three- 
fourths of the land is cultivated by tenants. 

Even John Bull is permitted to bore into Uncle Sam's cider- 
barrel, and insert his siphons at will. And our American people 
are foolish enough to believe that, for gold and silver, they can 
afford to barter away their lands and their industries to foreign 
capitalists. There is no consideration adequate to justify a 
prosperous people imposing upon themselves the obligation of 
perpetual tribute to foreign wealth. As I have sought to show, 
the wealth of the country, like its lands, is limited. If our 
factories and iron-mills and breweries are sold to Englishmen at 
a good round price, we may congratulate ourselves that we have 
the money to build more and better ones, but we cannot afford 
to build more than enough. The Englishman will retain what 
he gets, the American will have the remainder. After the Eng- 
lishman has obtained a foothold, when the Yankee under- 
takes to crowd him to the wall with competition, he will dis- 
cover that the economies of a people who insist on beef three 
times a day are poor weapons with which to vanquish a foe 
stolidly content with cheese and porridge. John Bull is a clever 
neighbor as a visiting acquaintance, but we cannot afford to 
pension him ; we cannot afford to give him a permanent job, 
even in our brewery. We have ample leisure to make beer for 
ourselves. And, as for his capital, — his money, — we do not 
need it. We have enough, not very well distributed, but the 
amount is ample, and millions lie idle in the treasury. 



CHAPTEE YII. 

TAXATION. 

We will now consider the manner in which public revenues 
should be raised, and the sources from whence they should be 
drawn. 

In matters pertaining to taxation, history is a treasury of ex- 
perience ; and there ought to be no great difficulty in determin- 



THE UISTRIBUTION OP WEALTH. 193 

ing the methods best adapted to the attainment of desired re- 
sults. Yet there is great apparent difference of opinion among 
those who assume the function of guiding the popular mind, 
and who profess to be seeking the same ends. I am not, how- 
ever, fully assured that the conflict of theories may not be some- 
times accounted for by the purpose to serve special interests, 
which often warps, when it does not conceal, real convictions. 
Nevertheless, there are wide differences of opinion sincerely en- 
tertained and earnestly supported by those who seek, regardless 
of special interests, to promote the common welfare. 

In the levy of taxes, or the imposition of duties on imports, 
the direct purpose is to secure a revenue to defray the expenses 
of government ; but in selecting the subject of taxation, in 
apportioning its burdens, and in prescribing the modes of collec- 
tion, the leading consideration should be the manner in which 
any proposed measure will affect the distribution of wealth. 
This is the question which, more than any other, concerns the 
welfare of the people as a whole. There are other considera- 
tions which may not be ignored, but which, in ordinary times 
at least, should be subordinated to the one leading purpose 
of laying the burden where it will be least felt, and of pro- 
tecting the weaker members of society from the pressure 
of those economic forces against which, without the friendly 
aid of a benign public policy, they are unable to effectively 
contend. 

The necessities of government may sometimes be so urgent 
and pressing that little heed can be given to the ultimate 
equities involved in the mode of collecting a public revenue; 
but, in the absence of peremptory necessity, every measure and 
every m.ethod should find its principal test of fitness in its 
collateral effects, as an economic force, in the adjustment of the 
industries and in the final distribution of wealth. 

I do not believe in the theory that the functions of govern- 
ment are to be considered as necessarily so limited and auto- 
matic that they should be confined to those ends alone that He 
in the line of the most immediate and direct purpose which calls 
those functions into exercise. G-overnment should be inspired 
by a guiding motive that looks to the future for the true 
measure of results. It is confined in grooves, in order to give 

13 



194 THE DISTEIBUTION OF WEALTH. 

certainty and safety to its operations, and not for tlie purpose 
of impairing its efficiency as a social and economic power. 

DUTIES ON IMPORTS. 

The sources of revenue of the United States government are 
customs duties and internal revenue taxes. Duties are levied 
OD a large number of articles, but chiefly on products of manu- 
facture and a few agricultural products which compete with the 
productions of our own people. These duties are levied with a 
view to encourage the home production of the articles taxed. 
Those duties which were formerly laid upon foreign products 
that do not compete with home products have, with few ex- 
cejDtions, been repealed, the revenues derived from them being 
no longer required to meet public expenditures. We are still, 
however, collecting a revenue of nearly sixty million dollars per 
annum from imports of sugar, — an article, the production of 
which in the United States, under present conditions, appears to 
be limited to a small part of the amount required for consump- 
tion. The duties on sugar, which amount to more than the 
duties on iron and steel and their products, and more than the 
sum of the duties on cotton and woollen fabrics combined, are 
paid by a larger number of consumers and in more nearly equal 
amounts per capita than any other tariff duties. 

According to the theory of those who contend for a tariff for 
revenue only, there could be no more appropriate subject than 
sugar, and none so clearly falling under all the conditions in- 
volved in that theory, except tea and coffee, which are articles 
of universal consumption not produced at home. 

If, however, in levying tariff duties, we would discriminate so 
that the burden of the tax may fall chiefly on the more wealthy 
and well-to-do classes, we must omit the food products con- 
sumed by the common people, which we are compelled to im- 
port, and, as a consequence, if duties are made sufficient to meet 
the demands of a necessary revenue, higher rates. must be laid 
on articles of manufacture, and the protective character of our 
revenue system would still remain, though modified, it might 
be, so as to shift its burdens and its protective benefits, and 
somewhat change the relative values of the products of the 
various industries affected. 



THE DISTKIBUTION OF WEALTH. 



195 



Tariff revenues on commodities paying $100,000 and upwards 
for the year ending June 30, 1887, and exhibited in round 
numbers, were as follows : 



Amount of 

Articles. Duty col- 
lected. 

Animals $933,000 

Art-works 578,000 

Barley 1,034,000 

Books and printed matter 684,000 

Brass and manufactures of 171,000 

Bristles 174,400 

Brushes 168,000 

Buttons 898,000 

Cement 220,400 

Chemicals, drugs, and dyes 4,654,000 

Chiccory root 106,700 

Clocks, watches, and parts thereof 490,000 

Coal (bituminous) 654,500 

Copper-ores 104,000 

Corsets 370,500 

Cotton manufactures 11,710,000 

Earthen-ware and china (mostly decorated) . . . 3,218,000 

Taney articles 3,000,000 

Fire-crackers 333,000 

Fish 612,000 

Flax, hemp, and jute textiles 9,498,000 

Fruits and nuts 4,210,000 

Furs 900,000 

Glass and glassware 4,910,000 

Gold and silver manufactures 132,000 

Hats, bonnets, and hoods 1,052,000 

Hay 157,500 

Hops 1,330,000 

Iron and steel and manufactures of 20,713,000 

Jewelry 107,000 

Lead 223,000 

Leather and manufactures of 3,287,000 

Liquors (spirituous and malt) 7,402,000 

Marble 600,000 

Matting and mats I77 OOO 

Metals, composition, etc 693 000 

Musical instruments ..... 403 000 

Oils, fixed and expressed 270 000 



Rate of 

Duty. 

Per cent. 

20 
30 
16.8 
25 

42.13 
15.08 
30 
25 
20 
25 to 110 
65.17 
30 

24.31 
49.63 
35 

40.17 
58.02 
41.04 
100 
21.72 
28.10 
27.90 
20 

59.01 
30 

21.44 
18.89 
42.64 
40.92 
25 

68.97 
30.06 
72.68 
39 and 53 
20 

32.21 
25 
25 



186,178,000 



196 THE DISTKIBUTION OF WEALTH. 

Brought forward 186,178,000 

Paints and colors 400,000 32.73 

Paper (writing) and manufactures of paper . . 425,000 21 and 25 

Precious stones 1,053,000 10 

Provisions (over half-cheese) 430,000 24 and 30 

Eice (cleaned) 758,958 113.03 

^ *' (granulated) or rice-meal 152,460 20 

Salt in bulk . 284,010 79.68 

" " bags 392,855 39.30 

Seeds 172,000 20.36 

Silk and manufactures of 15,541,000 49.71 

Soap 117,000 26.89 

Sugar 58,000,000 82.04 

Tobacco and cigars 9,128,000 83.32 

Vegetables (potatoes, pickles, and sauces) .... 548,000 24.05 

"Wood and manufactures of 1,503,000 18.28 

Wool (unmanufactured) 5,900,000 36.08 

Woollen manufactures 29,730,000 67.21 

Zinc, spelter, etc 111,500 46.35 

Total $210,824,783 47.08 

Total duties, embracing articles omitted . . $217,286,893 



Value of articles imported on which duties were paid .... $450,325,331 

Average rate of duty 47.08^ 

Value of articles imported free of duty . . . 233,093,659 

Total imports $683,418,990 

The imports not embraced in the above list consist of a large 
number of articles of which the aggregate amount makes up 
the difference between the totals given above. 

In the above list the specific duties are reduced to ad valorem 
rates, so as to exhibit, in convenient form, the duty paid. 

It will be observed that the higher rates of duty are laid upon 
articles of luxury, or at least upon those articles which are 
chiefly consumed by the more wealthy and well-to-do classes. 
The classes of imports from which the largest revenues are de- 
rived are barley, liquors, silk, sugar, tobacco and cigars, chem- 
icals, fancy articles, fruits and nuts, earthen-ware and china, 
flax, hemp, and jute textiles, glassware, hops, iron and steel, 
leather and manufactures of leather, precious stones, manufac- 
tures of wood, wool, woollen manufactures, cotton manufactures, 



THE DISTRIBUTION OF WEALTH. 197 

hats and bonnets. Aside from sugar and wool, beer and hops, 
the articles of the classes named are mostly of a high grade of 
manufactured articles and are not extensively consumed by the 
masses of the people. Many are of the class on which profits 
usually range higher than on articles of more universal consump- 
tion. 

A high rate of duty is also laid upon articles, the home man- 
ufacture of which it was the purpose specially to encourage. 
Two principles of discrimination are observed ; the duties on 
rice and sugar being the principal exceptions to the general 
policy on which this schedule is framed. Sugar is the product 
of a low grade of labor, and the industry is not, therefore, one 
which, under present conditions, should be encouraged. 

The policy of our American system of revenue, so far as it 
relates to duties on imports, may be defined to be to promote 
the change of unskilled labor into the more productive and 
more valuable forms of labor, by diverting it from the more 
crude and unproductive industries to those industries in which 
the products of the same number of laborers possess a greater 
value, generally for the reason that it is applied to the processes 
of production, through the agency of mechanical devices and 
machinery, whereby the productive power of the same labor is 
greatly multiplied ; and, second, subject to the first and principal 
aim, to so levy duties that the great burden of the revenue will 
rest on the wealthier members of society, who are more able to 
bear it, rather than the poorer classes, who are less able. That 
these principles are observed throughout cannot be claimed for 
the present schedule, but in the main it may be said that the 
duties conform to the policy defined. 

BY WHOM ARE DUTIES PAID? 

It may be well to consider here the question as to who pays 
the duties on foreign imports. John Stuart Mill, the leading 
English writer on the subject of political economy, and an 
advocate of free trade in the most unqualified sense, says, " The 
imposition of a tax on a community almost always diminishes 
the demand more or less ; and it can never, or scarcely ever, 
increase the demand. It may therefore be laid down as a 



198 THE DISTRIBUTION OF WEALTH. 

principle, that a tax on imported commodities, when it really 
operates as a tax and not as a prohibition either total or partial, 
almost always falls in part upon the foreigners who consume 
our goods ; and that this is a mode in which a nation may 
appropriate to itself, at the expense of foreigners, a larger share 
than would otherwise belong to it of the increase in the general 
productiveness of the labor and capital of the world, which 
results from the interchange of commodities among nations." 

I do not, however, perceive the necessity of looking for the 
result at the end of a route so circuitous. It is a principle 
universally recognized, that the price of a commodity is not 
determined alone by the cost of production. It is, in fact, de- 
termined by the demand for consumption. "Where the demand 
is not sufficient to absorb a product at a price which is a fair 
measure of the cost of production, production tends to diminish 
towards the point where the values of the product rise to a fair 
measure of the cost of production. The change is, however, 
gradual, and in the adjustment the cost of production is itself 
lowered by a reduction of wages and profits. 

If, for instance, a certain amount of wheat is raised in Kansas 
and shipped to New York City, and sold there for one dollar 
and a quarter per bushel, the freight from Kansas to New York 
being twenty-five cents per bushel, and the railways increase 
their charges by adding twenty-five cents more for each bushel 
of wheat, does any one suppose that wheat wiU rise to one 
dollar and a half in New York City because of increased rate 
of transportation ? The effect would be felt chiefly by the pro- 
ducer, the Kansas farmer. If the people of the United States 
are shipping wheat to England, and wheat is selling in the 
market there at the rate of one dollar and twenty-five cents per 
bushel, and the cost of transportation is suddenly raised twenty- 
five cents on the bushel, it will not be contended that wheat in 
England will advance to one dollar and fifty cents. If, instead 
of an increased cost of transportation, England levies a duty on 
wheat of twenty-five cents per bushel, the effect is the same as 
though the additional charge of twenty-five cents per bushel 
had been made for transportation. If England is selling a 
certain grade of woollen goods in the United States for one 
dollar per yard, and an import duty of twenty-five cents per 



THE DISTRIBUTION OF WEALTH. 199 

yard is laid upon that grade of goods, it is apparent that the 
people of the United States will at once greatly reduce their 
consumption of the imported cloth; and, in order to get a 
market, the English manufacturer must sell his cloth for one 
dollar and ten or one dollar and fifteen cents per yard, and he will 
reduce the cost of manufacture, unless his profit is suflScient to 
enable him to make the reduction in price without. He, like 
the American farmer, must have a market, if not at one price, 
at another. So that, in fact, duties on foreign imports are paid, 
in part, by the foreign producer and, in part, by the home con- 
sumer. How the rate is divided depends upon the commodity 
and upon the home competition. On silk and cotton and 
woollen goods, and on u'on products and many other imports, 
the foreigner pays from one-fourth to one-half the duty. It 
occasionally happens that the American manufacturer ships his 
surplus product abroad and sells it for less than it is sold in the 
home market. He is compelled to accept the conditions which 
are made for him. The duty on sugar is doubtless paid nearly 
altogether by the consumer, since it does not have the effect to 
advance the price beyond the point where consumption is 
materially reduced, so as to limit the demand below the range 
of the usual quality of product. 

It is true that the foreign people who receive less for their goods, 
to the extent that wages are reduced will be compelled to reduce 
their foreign purchases. The reduction, however, falls uj)on the 
markets of all countries with which they trade, and not alone 
on the country where the duty is imposed. Where, however, 
the reduction is made out of the profits of the manufacturer, the 
demand for foreign meats and bread-stuffs continues the same, the 
reduction being made in articles of luxury and such others as 
are not absolutely necessary. 

There are other considerations involved in the theory of 
protective duties besides those set forth in the chapter on pro- 
tection. There are industries which in themselves do not 
represent the most productive employment of labor, but which 
employ labor and capital that would otherwise remain idle, or 
which, because they constitute a valuable part of some general 
industry, require the fostering care of protective duties. Of 
this character of industry there is no better illustration than 



200 THE DISTRIBUTIOlir OF WEALTH. 

sheep and wool growing, which, except for considerations of this 
character, would not fall within the scope of any sound pro- 
tective policy. A consideration somewhat in detail of the 
claims of this industry to the special encouragement which pro- 
tective duties may afford will serve to illustrate the principles 
involved in the protective policy in application to other indus- 
tries as well. 

SHEEP HUSBANDRY. 

Sheep husbandry furnishes occupation to the agricultural 
classes during the winter season, and thereby employs time 
that would be otherwise idle. It widens the field of occupation, 
of interest, and of intelligence. Secondly, there is in this country 
a large area of land adapted to grazing, but not adapted to 
tillage, which would be brought into profitable use through the 
extension of this industry. Thirdly, sheep raising is most val- 
uable as a part of a general system of associated husbandry. It 
opens the way for a proper rotation of crops, and leads to the 
alternate use of the land for the purposes of grazing and tillage, 
and is the most effective means for preserving and increasing 
the fertility of the soil. It may be said to be an essential part 
of an harmonious and economic system of agriculture. It 
possesses a moral as well as an immediate economic value, and 
may be indirectly profitable to a people, and yet, in its imme- 
diate and direct results, unprofitable to individuals. Eut why, 
it may be asked, are not these considerations sufficient to pro- 
mote, to the full limit of its utility, the extension of this in- 
dustry without the aid of a protective tariff? 

The farmer is governed by what appears to be his immediate 
individual interest ; and this is essentially true if he be in debt, 
for then he is without choice. 

If, during the last five years, the American farmers had 
raised all the sheep required to supply the home market with 
all the wool which has been consumed in this country during 
that period, even though the prices of wool had been even lower 
than those which did prevail, on an estimate of the total general 
result is there any doubt but what the agricultural classes would 
have been greatly benefited ? 

What would have been the effect? First, our product of 



THE DISTRIBUTION OF WEALTH. 201 

wheat and corn and oats would have been less, and therefore, as 
I have shown elsewhere, on the whole of greater value. The 
total value of the agricultural crop, including sheep and wool, 
would have been increased in an amount which cannot be 
definitely estimated, but it is safe to say by the amount of the 
value of the increased sheep and wool product ; and I believe 
that the increase would have been greater. The labor required 
would have been even less than that which was required to 
produce the cereals that were raised during that period, and 
somewhat better distributed throughout the year. Second, the 
general average fertility of the soil would have been increased. 
Last, and most important in the present relation of our indus- 
tries, the agricultural classes, receiving a larger sum for their 
total product, would have received a larger proportionate share 
of the general product of the whole country, and thus been put 
more nearly on a level with the manufacturing industries. 

The direct result would have been a small increase in the 
value of certain grades of woollen goods and a slight advance in 
the price of food products. Agriculture would be to-day in a 
more healthy and prosperous condition, property values would 
be somewhat higher, making the burden of credits propor- 
tionately less, and the labor of mechanics, as well as the products 
of manufactures, would have been more in demand. The weak- 
ening of a great industry interferes with that steady course of 
production and consumption which is essential to general pros- 
perity, and produces that condition of industrial depression by 
which workers in the various industries are forced out of 
employment, and established adjustments of wages are broken 
up. Manufacturers, always on the alert to keep production 
within the limits of the effective demand at good prices, regu- 
late their working-force as their immediate interests appear to 
dictate, and the constant tendency is to drive larger numbers 
of workers beyond the range of steady and profitable industry. 
The several industries, including trade, constitute a system by 
which people effect an exchange of labor. Whether the number 
employed is one million or ten millions makes no difference as 
to the individual share of each. But the system is like a clock ; 
the wheels must be adjusted with reference to each other, and 
all must move together. But farmers, being individually subject 



202 THE DISTKIBUTION OF WEALTH. 

to prevailing conditions which they could not change, were com- 
pelled to pursue a course which many knew, but which the 
great majority could not well know, was detrimental to their 
own welfare. Had one individual reduced his grain product in 
order to grow sheep and wool, he would not, simply because he 
had raised less, have realized better prices for his grain, since 
the total volume of the grain product of the country would not 
have been perceptibly affected by the subtraction of a few 
bushels, and what he would have lost by his diminished grain 
product he could not have gained from his wool, it being in 
itself less profitable than grain. To effect a profitable substitu- 
tion of wool for grain, such as would reduce the grain product 
in sufficient amount to advance the price, required the combined 
action of the farmers of the nation, which could be secured only 
by a policy that would lead farmers in general to substitute 
wool in place of a part of the grain crop. Farmers, as a class, 
cannot be expected to be governed by the incidental value of an 
industry, as to its improvement of the soil or its effect in dis- 
tributing labor throughout the seasons, and, when disposed to 
give such considerations full weight, present necessity compels 
them to pursue those branches of agriculture promising the 
largest immediate returns. 

There is no industry which, in the levy of duties or taxes, 
demands more consideration than that of agriculture in its 
present condition in this country. For there is no industry so 
helpless against destructive competition ; none, the annual re- 
turns of which fluctuate through so wide a range. The prin- 
cipal factor in modifying the effect of these fluctuations is a 
diversity of production, whereby the loss on one article is made 
up by the gain on another. 

The time is coming, however, after this country shall be more 
thickly populated than now, when this capacity to overweight 
the markets will be subjected to the limitations on the agricul- 
tural area, and the farmer, as the owner of a natural monopoly, 
instead of needing the aid of protective duties, will become a 
power against which other classes may require the protection of 
foreign competition as they do in England to-day. But policies 
must be adapted to prevailing conditions ; and one reason for 
guarding agricultural interests now is that the accumulation 



THE DISTRIBUTION OF WEALTH. 203 

of lands in large bodies, owned by single individuals, which 
must result from the long continuance of present conditions, 
may be prevented. It is the special interest of the American 
people at the present time to guard against monopoly in land. 
And, aside from express limitations, no remedy can be made so 
effective as properly-adjusted revenue laws. 

PASTURAGE OF THE PUBLIC LANDS. 

The rapid growth of the cattle industry on the public lands 
of the West has not been productive of good to the farmers as 
a class nor to the people as a whole. This appropriation of the 
public domain to the use of the ranchmen for grazing purposes 
constituted a most effective attack of accumulated capital on 
one of the chief branches of agriculture, in consequence of which 
that industry has been much disorganized. Destructive compe- 
tition compelled a change in the relations of the different 
branches of agriculture as a properly-organized system of hus- 
bandry, in the interest of capitalists, many of whom were not 
American citizens, — a change disastrous to the greatest Ameri- 
can industry iu its immediate results, and to all other industries 
in its secondary effects. Had a sufficient tax been laid upon 
the cattle grown upon the public lands to have prevented 
demoralizing and destructive competition with a leading prod- 
uct of an industry which the whole body of agricultural people 
were directly, and other classes were indirectly, interested in 
maintaining, all would have enjoyed the benefit of a more 
healthy industrial condition. 

It is true that most of this land is fitted only for grazing, and 
that it must be appropriated to that purpose. But the growth 
of the cattle industry in the public lands of the West should 
have been restrained to a pace consistent with the continued 
prosperity of agriculture in the States. The notion, so generally 
inculcated, that cheap bread or cheap food or cheap clothing is 
to be desired, even at the expense of industrial derangement, 
is doubtless responsible for the neglect to guard agriculture, as 
an organized industry, against the raid of ranchmen and cow- 
boys. 

Changes even in the direction of cheaper production, in what- 
ever manner they may be brought about, whether by machinery 



204 THE DISTEIBUTION OF WEALTH. 

or by the stocking-up of the wild Western ranges, are to be 
encouraged ; but the more steady and gradual the change, as a 
rule, the better for the greater number of people. The shifting 
of labor from one form of industry to another is always a slow 
process; and the adjustment of the different branches of the 
agricultural industry proceeds more slowly, and is effected with 
greater difficulty, than industrial changes in general. 

Cattle, horses, and sheep require years to mature them ; and 
an overstocked market cannot, as in the manufacturing indus- 
tries, be relieved by a sudden diminution of the product. In 
agriculture it is not possible to determine beforehand what the 
product is to be, for statistics do not furnish the required infor- 
mation. The statistical information furnished by the Agri- 
cultural Department is generally too late to be of use to farmers 
in regulating production according to the measure of the demand. 

Writers on political economy usually proceed on the theory 
that all industries will promptly adjust themselves to the effects 
of competition, however violent that competition may be. Noth- 
ing could be further from the truth. Labor is a heavy com- 
modity, not susceptible of rapid changes of form, or of being 
promptly shifted from one locality to another to meet the 
fluctuating demands of trade. Professor Fawcett says, " Dur- 
ing the winter months an ordinary agricultural laborer in York- 
shire earns three dollars and twelve cents per week ; the wages 
of a Wiltshire or Dorchestershire laborer, doing the same kind of 
work, and working a similar number of hours, are only two 
dollars and sixteen cents a week. This great difference in 
wages is not counterbalanced by other considerations. Living 
is not more expensive in Yorkshire than in Dorchestershire ; and 
the Dorchestershire laborer does not enjoy any particular 
advantages or privileges which are denied to the Yorkshire 
laborer." 

Gf the freedom of movement from one industry to another, 
says Professor Walker, " Professor Cairnes sought to reach a 
measure of the rate of this movement in England. His result 
was substantially, that only loss by death or disability couM be 
relied on to relieve the labor market in any branch of industry 
which was overdone ; and the sole disposable fund for supply- 
ing new laborers to new and growing branches of industry was 



THE DISTRIBUTION OF WEALTH. 205 

to be found in the body of persons each year coming of age, in- 
dustrially speaking. 

" It would be easy to show that the play thus given to the 
labor market is far within the limits of the great oscillations of 
industiy which labor must meet fully and promptly, or suffer 
because it cannot meet them." 

Professor Walker dwells much more at length upon the 
sluggishness of labor in adapting itself to changing conditions. 
The remedy, he thinks, must be found in some plan by which 
these movements of labor may be accelerated. It appears to 
me, however, that the policy of the law should be, so far as 
practicable, to protect the working-people from the rush of 
events by which the relations of the industries are deranged. 
The speed of genuine progress is gauged by the mobility of 
labor. Competition, to the extent that it is useful, should be 
free ; when destructive, it should be restrained, where restraints 
may be applied under the operation of general and practical 
laws, that permit free play to the ordinary movements of in- 
dustrial enterprise. Because competition is an essential factor in 
production and distribution, the ready inference is that competi- 
tion should never be restrained. Thus we fall into careless 
generalizations, that take no account of important distinctions 
to which exceptional occasions may give rise. 

If it be the chief aim of civilization to gather wealth into the 
hands of a few, to build palaces for princes, and adorn their 
walls with the works of highest art, the political economists are 
right, and their doctrines need no amendment ; but if the pur- 
pose be to lift the common people to a higher level of thought 
and refinement and comfort, their theories have not been veri- 
fied by results ; the march of civilization has left too many be- 
hind ; there is too much truth in the statement made by Mr. 
Carnegie, that the contrast between the palace of the millionaire 
and the cottage of the laborer measures the change which has 
come with civilization. 

THE BURDEN OP TAXATION. 

Taxes are a public necessity, and, to the extent that they may 
be required for legitimate expenditures, cannot be avoided. 
There is always a limit within which taxes may be confined, 



206 THE DISTRIBUTION OF WEALTH. 

without withholding funds which may be considered necessary 
for public uses, and beyond which the question is always open 
for discussion as to whether the best interests of the people are 
subserved by the collection and expenditure of public revenues. 
The burden of taxation is a theme entering into the discussions 
of every important political campaign, and the inquiry arises. To 
what extent are taxes a burden upon the peoj)le, and what 
degree of relief might be expected from a reduction of taxation ? 
It is all-important that industrial evils should be traced to their 
true sources, and that we should measure correctly the causes 
to which they owe their origin. 

Mr. Atkinson is accustomed to refer to taxation as though the 
amoimt of taxes paid represented so much taken from the 
pockets of the people which they would otherwise have and re- 
tain to add to savings. The view is plausible, and generally 
goes unquestioned, but is it true ? 

The taxes j)aid represent a certain portion of the annual 
product ; according to the estimate I have made of the total 
amount, apparently a little more than one-twelfth. Since, how- 
ever, a considerable portion is spent for public buildings, river 
and harbor improvements, and in other ways embracing a part 
of the labor which has already been included in the total 
product, the proportion is something less, say one- fifteenth. 
This amount may be said to represent so much wheat, so much 
corn, so much clothing, iron, carpentering, — in short, so much 
labor. We may say, therefore, that one-fifteenth of the labor 
of those engaged in productive industries was consumed in 
public works, and in food and clothing, and other comforts for 
government employes,- pensioners, public creditors, and others. 
The whole matter resolves itself into a question of the consump- 
tion of labor. To what extent did the people deprive them- 
selves of what they otherwise might have enjoyed, by expend- 
ing one-fifteenth of their labor in this manner ? It is a question, 
first, as to whether the people have that amount of labor to spare. 

Among the employes, whose services were paid for out of the 
public revenues, were two hundred and twenty-seven thousand 
teachers, two-thirds of whom were women. It is not probable 
that the corn crop was short, that the iron and steel product 
was less, or that even the supply of muslins and jeans was defi- 



THE DISTEIBUTION OF WEALTH. 207 

cient, because of this diversion of labor. But a large number of 
men were also employed in government service, who, had they 
not been so employed, would have engaged in productive in- 
dustry, in agriculture, manufacture, or trade. If, under such 
conditions, our product had been greater, which I doubt, who 
would have consumed it? Suppose the agricultural product 
had been increased, who would have been benefited? Was 
there any demand for labor to make nails, or to weave cotton 
and wool ? Was there any want, not supplied, of book-keepers 
and clerks? Would it have assisted the poor to have added 
to the number of those who were competing in the market for 
work ? or would the fiercer competition have blocked the way 
to increased production and better distribution ? 

According to Mr. Atkinson, in the cotton and woollen indus- 
try, where employment was certainly as steady as in any other, 
the average term of employment was not over ten months in 
the year.* The report of the Bureau of Labor Statistics for Illi- 
nois for the year 1886, which gives the record of the number of 
weeks' work performed by eighty-five thousand three hundred 
and twenty-nine mechanics, railway employes, coal-miners, 
workers in manufacturing establishments, barbers, tailors, 
bakers, and brewers, all belonging to organized labor associa- 
tions, shows an average loss of twenty-eight per cent, of time 
during the year. Bricklayers and stone-cutters average twenty- 
seven weeks of work ; brickmakers, twenty-five weeks ; plumb- 
ers, twenty-eight weeks ; carpenters, thirty weeks ; hod-carriers, 
thirty -five weeks; plasterers, forty weeks, coopers, metal- 
workers, and upholsterers, thirty weeks ; tailors, wood-workers, 
terra-cotta workers, and half the iron-moulders, thirty-five 
weeks ; and seventj^-three per cent, of the coal-miners, twenty- 
six weeks or less for the year. In 1885 the census of Massa- 
chusetts shows that persons engaged in manufacturing were 
unemployed 3.9 months during the year at their principal occu- 
pations. If we add to this the number of those who may be 
said to have no regular occupation in villages and towns, the 
per cent, of idle labor will appear still greater. 

* The blast-furnaces ran on tlie average but eight months, and the steel- 
works hut nine months during the census year. 



208 THE DISTRIBUTION OF WEALTH. 

If, working but three-fourths of the time, we produce all that, 
under the present system of distribution, we are able to con- 
sume, all the market will accept, cannot the girls be spared to 
teach school? 

Extravagance and wastefulness of expenditure are certainly 
to be condemned, since they are always unnecessary and are in 
themselves, as well as in the demoralizing effects of example, 
detrimental to the public welfare. But it must nevertheless be 
borne in mind that our government expenditures are simply 
the expenditure of so much labor, of which we have an abun- 
dance left and running to waste. 

The question of the reduction of the amount of taxes is there- 
fore of little moment. They who strive in that direction to 
obtain relief from existing evils are wasting time. If our gov- 
ernment could be run without a dollar of expense, there would 
be nothing gained. Industry is the life of the nation. An in- 
vention that would make labor unnecessary would be a curse 
upon the people. The real question is how to distribute the 
burden of taxation that it may be lightly and cheerfully borne ; 
how to relieve those who are overweighted, and to distribute 
the rewards of industry according to merit. 

The question is not the amount of taxes, but the sources from 
which they shall be drawn. It is a question of how taxes shall 
be laid so as not to interrupt the course of industry and distri- 
bution. The yoke is light enough when properly adjusted. 

It is not a question as to how much shall be withdrawn from 
the total product of the nation's industry and distributed through 
the channel of public expenditures ; and all the rattle and noise 
about high taxes is but the pow-wow of the Indian medicine-man, 
who understands neither the pathology nor therapeutics of the 
disease. 

Our public schools have everywhere suffered from the false 
notion that taxes necessary to secure good schools are a public 
burden. G-ood schools cost nothing but labor, and generally 
female labor at that, which would be otherwise unemployed, 
and, when they are made universal, they add no weight to the 
burden that oppresses industry. It is only where good schools 
and poor ones, high taxes in one community and low taxes in 
another, generous living and niggardly saving compete with 



THE DISTRIBUTION OF WEALTH. 209 

each other in a common market, that taxes for purposes of 
education are felt. 

It is the conflict between Chinese habits and American habits. 
The man who keeps his children out of school, in order to ob- 
tain a larger share of the common market than his more liberal 
and enlightened neighbor, is a public enemy, and should be 
subject to the penalties of the law. 

The present product, equitably distributed, and consumed with- 
out necessary waste, would be adequate to meet the reasonable 
wants of the whole people ; and, if that product were increased 
by the employment of one-fourth of the idle labor and machinery, 
it would be abundant to supply the comforts and luxuries 
necessary to satisfy the demands of our present civilization. 

The problem is how to secure that distribution ; since a prompt 
and equitable distribution, conforming to the requirements of 
social demands, would bring into steady employment the labor 
necessary to meet the demand. 

Of food products there is already an abundance ; but improve- 
ment is much needed in the direction of more economic con- 
sumption and improved domestic cookery. And, in devoting 
his attention to the latter branch of economic and sanitary 
science, Mr. Edward Atkinson is rendering a public service 
fruitful of practical results, and altogether worthy of his supe- 
rior talents. He should be encouraged to continue, only now 
and then laying aside apron and cap to find needed recreation 
in occasional rambles through the fields of statistical romance. 

With all this burden of taxation upon us, we have filled the 
country with railroads, factories, furnaces, and mills and dwell- 
ings. Better dwellings, it is true, are needed, but the labor that 
could have supplied them has been sitting on dry-goods boxes, 
whittling pine sticks, waiting for work, and all because the 
round of distribution has been continually interrupted by ob- 
structions interposed by the efforts of aggregated wealth, in 
continual struggle to maintain its margin of profit and extend 
its mortgage upon the future product of the labor of the coun- 
try, and also by the fierce conflict among the working-people 
trampling over each other to gather the coin that is tossed 
among the crowd, where, since all cannot be in the middle, 
many are on the outer edges picking up stray pieces that roll 

14 



210 THE DISTEIBUTION OF WEALTH. 

beyond the usual range. This chaotic mass of workers and 
capitalists must be reduced to order by some system of limita- 
tions and restraints that will give free play to individual indus- 
try, by protecting it from the avarice of wealth, and thereby, 
at the same time, secure it from the mad rush of the surging 
crowd, who, pressed by daily needs, are forever trampling op- 
portunity under foot. 

PENSIONS. 

Since 1863 we have paid in pensions to old soldiers, their 
widows and orphan children, a billion of dollars. We have paid 
it, but how ? First in money, which was soon expended for 
the comforts of life. We have therefore paid it in the products 
of the field, the workshop, and the factory ; paid it out of our 
abundant harvests, and out of the products of machinery run 
by steam. We have paid it with the labor of farmers, carpen- 
ters, clerks, merchants, factory employes, bakers, barbers, min- 
isters, and teachers ; we have paid it in new houses, in corn, 
potatoes, and nieat, in flour and bread, in clothing, in hair-cuts 
and in sermons. We have paid it chiefly in perishable products 
which we might neither keep nor otherwise consume, and which, 
when consumed, are promptly replaced by like products, all of 
which we have abundant power to create. 

During the same period we have paid over two billion three 
hundred million dollars interest on the public debt. How have 
we paid it ? In the first instance in money, as pensions were 
paid. A certain portion of this money was expended for the 
perishable products of labor, which, being gone, do not stand in 
the way of further production. Another part was expended in 
the construction of business houses, factories, mills, and rail- 
roads, which maintain themselves out of their own profits ; so 
that the demand of the country, except as increased by the 
growth of population, has been substantially supplied, directly 
for years, and indirectly, considering the profits on capital, for- 
ever. The demand has been supplied, and the common people 
have divested themselves of the opportunity to acquire the in- 
terest of ownership in the great body of the revenue-producing 
wealth of the nation. 

The farmer furnishes wheat to the consumer, who eats it and 



THE DISTRIBUTION OF WEALTH. 211 

returns for more. When the barber shaves his customer he does 
not close his shop, for he knows that beard will grow again and 
his customer will come back; the bar-tender knows that his 
patron, who has drunk his fill, will soon return as thirsty as 
before ; the shoemaker is comforted with the thought that half- 
soles wear out ; and even the minister may find consolation in 
the worldly knowledge that souls once brought to grace are 
prone to backslide and return to be saved again ; but when rail- 
roads are built, railroad building is at an end, for railroads pay 
their own way, and the capitalist is never called upon to expend 
his gathered fortune either to repair or build them anew. 

We have paid the interest by expending our heritage of 
opportunity! 

But a large portion of this enormous sum paid in interest has 
not been expended even in constructive labor, by capitalists 
themselves, but has been returned to the people in the form of 
loans to farmers and mechanics. We have paid the interest on 
the public debt in promises to pay more interest, in mortgages 
that will never die till strangled by the iron grasp of an un- 
friendly law. They will remain, continually urging the people 
into the hurry of wasteful endeavor. They will ride production 
and distribution with whip and spur, till the whole j)eople are 
joined in one wild race for the prizes of wealth which are re- 
served to the swift and strong alone. It is under such condi- 
tions that speculation thrives, and wealth is amassed in millions, 
and the common people grow poor. We have not paid the in- 
terest ; we have but renewed the bond, and chained labor to the 
chariots of millionaires. 

The relation of the government of the United States to the 
public debt is that of an intermediary, an agent to collect the 
money from the people and transmit it to the bondholder. The 
people are the debtors, and, instead of paying the interest on 
the bonds in the products of labor, — the only real payment 
there can be, — the people have reborrowed the money at a 
higher rate of interest than before. 

He who imagines that only the particular debtors whose 
names are on the notes are concerned, fails to consider the effect 
which a large amount of individual indebtedness owing to a 
class of wealthy capitalists constantly exerts on production and 



212 THE DISTKIBUTION OF WEALTH. 

distribution, and the manner in which values are necessarily- 
affected through the operation of such indebtedness on the dis- 
tribution of money. The debtors represent only the particular 
spots where the leeches are applied ; the blood by which they 
are distended is withdrawn from the entire industrial system. 

When fortunes grow so large that their gathering gains can 
be no longer consumed in the products of the labor of the peo- 
ple of the country from which they are drawn, they block the 
way to general thrift ; check the growth of small savings among 
the people, by which are gathered those small fortunes which 
yield a competence to many families, endure for a generation, 
and are then dissolved and distributed among the people of the 
generation that follows after, in such amounts as are sufficient 
to give assistance and encouragement to the building anew of 
like fortunes, thus gathering and dissolving again, as they serve 
their purpose, yielding opportunity for leisure and culture to 
many families distributed among the people at large as centres 
of moral force and refined social influence. 

That selfish maxim, "Look out for number one," cannot 
always be successfully observed, without a considerate regard 
for numbers two, three, and four. A people are bound together 
by common ties and common interests often liable to be over- 
looked in the struggle for individual advantage. A man cannot 
live a civilized life among Indians, for the simple reason that 
the people about him are Indians. He may have the necessary 
capital to start a bank, or a merchant-tailoring establishment, 
or an Italian opera ; but a bank would not flourish, and even an 
Italian opera might fail of appreciation. Individual welfare 
depends on general thrift ; and every man has a selfish, if not a 
humane, interest in the welfare of his neighbor, of which he 
cannot divest himself. 

It is too late now to mend the mistakes of years ago, errors 
of policy now too long past to require special attention, and 
which, for the most part, were but the natural, perhaps unavoid- 
able, results of economic conditions which had grown up 
through the course of centuries, and for which no set of in- 
dividuals and no political party may be held accountable. The 
only purpose, in bringing these measures and their results into 
view at the present time, is to gather from experience a knowl- 



THE DI8TEIBUTI0N OF WEALTH. 213 

edge of the route that must be travelled in order to escape from 
the swamp into which we have wandered. 

INDIRECT TAXATION. 

It has been the experience of all nations that taxes in the 
form of duties on imports are more willingly paid, and meet 
with less opposition from those who pay them, than direct 
taxes. Some writers have regarded this as a reason why this 
mode of raising public revenues should be discouraged, placing 
their objection on the ground that taxes drawn from the people 
in this manner do not sufficiently challenge their attention to 
cause them to properly guard their own interests, and that this 
mode of collecting taxes therefore leads to extravagance in 
expenditure. 

But there is something more to be said in favor of indirect 
taxation than merely that it does not arouse opposition among 
the people. The burden not only seems to be lighter ; it is so in 
fact. It is a tax which is paid according to consumption, which 
every man regulates more or less, both as to time and amount, 
according to his ability and convenience. It is paid at no stated 
time. Money is all the while being collected and returned to 
the people. The stream is constant ; there is no interruption 
of trade or of industry. The amount of trade determines the 
amount of tax. The tax is a part of each day's expenditure, 
whereas direct taxes are paid in bulk at a certain season of the 
year. The people of a whole State are required to store a re- 
quisite amount of money, from five dollars to ten thousand 
dollars in amount, each ; sellers become numerous and buyers 
become few ; it becomes more difficult for each one to raise 
money, because his neighbors are all endeavoring to do the 
same thing ; trade is interrupted and values are impaired. 
Sometimes the depression in values, particularly of farm-stock, 
is very marked, and the period of depression may be protracted 
for months. The demand for money for the payment of taxes 
at a particular time is so great that, where the volume of cur- 
rency is gauged by the average amount of business in a country, 
as in the nature of things it must be, a disturbance of the course 
of distribution necessarily follows. Production is reduced in 
corresponding degree, and there is a consequent waste of labor. 



214 THE DISTRIBUTION OF WEALTH. 

It may be said, also, that the burden of a direct tax often 
bears very unequally on diiferent members of society accord- 
ingly as they happen to be prepared to meet the stress of the 
demand or be compelled to make sacrifice of property in order 
to do so. 

The fact must never be overlooked, that the real burden of 
taxation is not measured by the amount, so much as by the degree 
of disturbance to the even run of production and distribution. Its 
weight depends upon how it is adjusted ; upon the direction 
taken by the j)ublic revenues in their distribution after they are 
collected, and the degree of promptness with which moneys 
collected are returned to the people. A surplus in the treasury, 
beyond that which is required to meet accruing demands, is not, 
under any circumstances, to be justified or excused. Values are 
gauged according to the volume of money in use ; and a with- 
drawal of a large amount of money from the people at any one 
time, to lie in the public treasury, forces a readjustment of 
values corresponding to the amount of money remaining in cir- 
culation, and readjustment of values is only another name for 
robbery. It is true that an entire readjustment of values does 
Dot at once follow. The place of the withdrawn currency may 
be, to some extent, supplied by an extension of credit, or the 
volume of trade may diminish. But, however the pressure may 
be relieved, and whether or not the consequences are made 
manifest in clearly-defined results, many people must suffer loss. 

INTERNAL REVENIJE TAXES. 

The internal revenue taxes of the United States for the year 
1887 were as follows : 

Spirits $65,829,322 

Fermented liquors 21,922,187 

Tobacco 30,108,067 

Banks and bankers 4,288 

Oleo-margarine and dealers 723,948 

Penalties 220,205 

$118,808,017 

The tax on spirits, fermented liquors, and tobacco was, when 
levied, justified by the necessity for a large revenue, these 



THE DISTRIBUTION OF WEALTH. 215 

articles being considered suitable objects of taxation because of 
the large revenue they may be made to yield and the facility 
with which the tax may be collected. Since, however, the 
necessity out of which these taxes originally sprung no longer 
continues, the question now arises as to whether there remains 
any good reason for maintaining them. If it were true that 
the tax on spirits tended greatly to diminish their consumption, 
there would be little question as to the wisdom of continuing 
the tax. That the large consumption of intoxicating liquors is 
a grave social evil admits of no controversy. But it is unfortu- 
nately true that people who use these articles pay little heed to 
the price ; and I believe the opinion is generally entertained by 
careful observers that the increased cost resulting from high 
taxes tends in no marked degree to diminish their use. 

The taxes on liquors and tobacco are frequently defended on 
the ground that these articles are luxuries. Taxes are laid on 
the luxuries rather than on the necessaries of life, for the reason 
alone that taxes on luxuries are supposed to fall upon the more 
wealthy members of society who are able to pay them, rather 
than on the poor who are less able. The distinction drawn is 
not to be determined by the definition of words ; it is a practical 
distinction relating to a clearly-defined economic principle. 

Tobacco is an article of almost universal consumption ; and 
the greater part of the spirituous and malt liquors which are 
consumed are drunk by working-men, the majority of whom can 
ill afford the indulgence ; and large numbers deprive themselves 
and families of the necessaries of life in order to gratify an 
appetite which they are unable to restrain. To impose upon 
these people, and especially upon those already impoverished 
through the indulgence of an unfortunate habit, a special tax, 
in addition to the burdens which they share equally with other 
members of society, is only another exhibition of that sj)irit of 
injustice which takes advantage of the weak because, having no 
power to resist, they become the easy prey of those whose 
interest it may be to despoil them. And then to justify the 
robbery on the ground that the tax is a tax upon luxuries is to 
offend intelligent sincerity with transparent pretence. 

In favor of the license tax, it may be said that it is a measure 
whereby the evil of indulgence in intoxicating liquors is re- 



216 THE DISTEIBTTTION OF WEALTH. 

strained. But the revenue receiyed from this tax, instead of 
being appropriated exclusively to public uses in general, should 
be, in part at least, converted into a fund for the education and 
support of the necessitous and dependent poor, to whom in 
equity it belongs. The money which should be used to purchase 
food and clothing for women and children is gathered into the 
revenues of a great city and expended for public uses, thus 
relieving property owners from burdens which they could not 
otherwise escape. As ever, the weak and defenceless are the 
prey of the heartless and the strong. A part of this fund might 
be employed to a good purpose in providing places of respect- 
able resort, free from the demoralizing influence of vicious 
surroundings, where working-men might find opportunities for 
amusement and social intercourse, which they must now seek 
in drinking-saloons, for the reason that they may not be found 
elsewhere at prices which they are able to afford. 

There is a further objection to the internal revenue tax on 
liquors because of the fact that the necessary conditions imposed 
on the manufacture are such as to make a monopoly of the 
trade, thus affording opportunities for the aggregation of wealth 
which should find no favor in the policy of the law. 

INCOME TAX. 

In the United Kingdom of England, Scotland, and Ireland a 
large portion of the annual revenue is raised by a tax on incomes ; 
the amount of this tax in 1881 being fifty-three million two 
hundred and fifty thousand dollars. 

The United States collected an income tax from 1863 to 1872 
inclusive. The largest amount raised in any one year was about 
sixty-one million dollars in 1866, assessed on four hundred and 
sixty thousand one hundred and seventy persons. The law was 
a departure from the methods with which the peoj)le were 
familiar, and met with much opposition. Its enforcement was 
attended with difiiculties, which experience would no doubt, in 
time, greatly modify. The chief objection to this mode of taxa- 
tion lies in the inquisitorial character of the assessment, which 
requires disclosures that many people are reluctant to make. 
But the tax is an essentially just one, and, if levied on incomes 
of not less than two thousand dollars, much of the friction 



THE DISTRIBUTION OF WEALTH. 217 

occasioned by the operation of the law would be relieved without 
a corresponding reduction in the amount of revenue. 

Taxes should, in the main, be collected out of that excess of 
income over necessary expenditures which may be spared 
without inconvenience, and which, since it generally represents 
gains accruing from the advantages of superior skill in trade, or 
profits on capital, is the product of the labor of other people, 
may be justly taken for the common benefit. The only reason- 
able objections which may be interposed are such as arise 
out of public policy. If the tax were graded according to the 
amount of income, — if, say, two per cent, were the rate on the 
amount over two thousand dollars and under three thousand 
dollars, three per cent, on the next thousand, four per cent, on 
the next, and so on until the amount of the tax would absorb 
the excess of income, — the law would be most effective in modi- 
fying inequalities of distribution and equalizing opportunities 
among the people. Such a law would impose no burden 
upon industry, nor would it interfere with the operations of 
trade. It would meet with opi)osition from those who would 
be most affected by it, but even they would cease to complain 
after it had become fully established as a feature of the revenue) 
system of the country. 

DIRECT PROPERTY TAXES. 

The taxes collected by States and minor political divisions 
are direct taxes laid almost wholly on property without distinc- 
tion as to character or amount. However, in some States 
exceptions are made of amounts under a certain sum ; and since 
assessors are accustomed to place very low valuations on house- 
hold goods, those persons who own little else enjoy the benefit 
of an exception in practice not allowed in theory. 

In a country where the right of suffrage is exercised by all, 
and where, in theory at least, every man possesses equal author- 
ity over the disposition of the public revenues, public policy 
would seem to require that all, unless it should be the exception- 
ally poor, should feel the touch of the public burden. The 
payment of taxes tends to enhance the interest of the citizen 
in public affairs, while entire freedom from pecuniary responsi- 
bility places in the hands of the voter who may be exempt a 



218 THE DISTEIBUTION OF WEALTH. 

power without the restraint required to hold that power in 
check. 

Taxes are paid from the annual product of labor ; and prop- 
erty which yields no revenue ought not to be taxed, if it were 
practicable otherwise to rate taxes according to incomes. There 
is no good reason for taxing household goods, or a homestead, 
except that the amount of property of this class may be con- 
sidered as an index to the amount of the owner's income, or to 
his ability to pay. But, since it is impracticable to gauge the 
amount of the earnings of individuals, or their ability to con- 
tribute to the public revenues, by any more accurate system of 
measurement, the method is adopted of assessing each according 
to his property, regardless of its character. 

Church property is not taxed, for the reason that it neither 
yields a revenue nor represents an income. Revenue -bearing 
property of churches, however, should not be exempt, unless, 
considered as contributing to a worthy object, the State may 
properly allow an exemption below a reasonable limit fixed by 
constitutional law. This policy, however, is one which is liable 
to abuse, since it does not have the support of any clearly- 
defined principle marking the limit which may not be passed. 
Churches may be educational institutions of great public benefit, 
or they maybe narrow sectarian establishments whose influence 
is pernicious. The Legislature cannot assume the function of 
deciding. 

TAXES ON REAL ESTATE. 

Mr. Edward Atkinson is of the opinion that a tax on real 
estate should constitute the principal source of public revenue, 
holding that such a tax would so diffuse itself that the burden 
of its payment would be more widely and equitably distributed 
than that of any other form of taxation. And if taxes are to 
be collected from a single source only, a tax on real estate would 
come nearer filling all the requirements of an equitable tax than 
any other. But it is not true that the revenues raised by direct 
taxation, where the amount is large, can be confined wholly 
either to real estate, or to personal property, or to any species 
of property, without causing the burden of taxation to press 
very unequally. Theories of political economy are generally 
framed on the assumption of the complete mobility of capital 



THE DISTEIBUTION OP WEALTH. 219 

and labor, and of the prompt adjustment of inequalities by 
means of the levelling power of competition. But, since the fact 
is that labor is most sluggish in its movements as regards 
changes both of occupation and locality, and the movements of 
capital in many departments of industry are subject to natural 
limitations prescribed by the form of investment, as well as 
other obstructing causes, the theory fails to conform to actual 
conditions, and is without value as a test of practical measures. 

A tax levied upon real estate, occupied for the purposes of 
trade or manufacture, quickly diifuses itself among consumers, 
without hinderance from any strong counteracting tendency. 
To the amount of the original cost of his goods, the merchant 
adds cost of carriage, rents, clerk-hire, and a margin of profits ; 
the total determines his retail prices, and the consumer pays the 
whole. The trade of every merchant is subject to the same 
conditions. The manufacturer fixes his prices by the same rule. 
When prices become too high, consumption falls ofi^, and the 
reactionary effect is seen in a corresponding reduction of each 
of the several items of cost, subject, of course, to causes which 
disturb the ratios of reduction as between profits, rents, wages, 
and transportation. Here the conditions approximately conform 
to the facts assumed by the general theory. 

But suppose the cost of an agricultural product be increased, 
say, twenty per cent, by the levy of high taxes or transportation 
charges, the price of the agricultural product may not be advanced 
in the least. The farmer does not say, rents are so much, wages 
so much, and taxes are so much, therefore this grain or these 
cattle must bring a certain price, and in this manner determine 
what the consumer shall pay. The purchaser fixes the price 
according to the supply. When prices of a particular agricul- 
tural commodity are low as compared with other agricultural 
commodities, the farmer produces less of the particular com- 
modity, but more of something else. When prices of all com- 
modities are reduced, he only endeavors to produce more, in 
order to make up in quantity what he loses in price. His 
capital is fixed, his occupation is fixed, and he cannot relieve 
himself from the pressure of taxes or of railway charges by 
shifting the burden on consumers. 

Agricultural labor is to a great extent unskilled labor. While 



220 THE DISTRIBUTION OF WEALTH. 

all cannot do equally well, everybody can farm, and surplus labor 
tends to drift into agriculture. All the lands of a country will 
be occupied and cultivated. There is a counter-tendency, it is 
true, but it is not effective to put agriculture on a level of ad- 
vantage with other industries. 

When .the agricultural area is all occupied, and the limit of 
cultivation without material increase of capital and skill shall 
have been reached, and the demand for agricultural products 
begins to press against this limitation, then a tax on real estate 
will diffuse itself among consumers, and the higher the tax the 
higher the relative price of agricultural products. Then the 
theory of Mr. Atkinson will more nearly define the operation 
of an economic principle. 

Taxes in different States and in different localities greatly 
vary; and a tax on lands might, in some sections, not only 
destroy all the profits of agriculture, but also force wages far 
below the average general standard. It would be like a sj)ecial 
tax on a single merchant in a village, or on a woollen-mill in one 
locality. By, in the first instance, through the direct operation 
of law, distributing the burden of taxation over all classes of 
property, these inequalities are reduced to a minimum. 

There is no good reason, however, why taxes on real estate 
should be made absolutely uniform in proportion to value. The 
man who owns and cultivates forty acres of land ought not to 
pay the same rate of tax as the man who owns five thousand 
acres, which he rents to other people. Lands included in one 
individual ownership to the value of, say, five thousand dollars, 
aside from dwelling-house, might be taxed at the same rate ; but 
on values in excess of that amount the rate should be gradually 
advanced to the point of making ownership unprofitable after a 
certain limit has been reached. The operation of a revenue 
measure of this character, in preventing the aggregation of real 
property, might be more satisfactory than that of a law pre- 
scribing an absolute limit on the amount. 

The homesteads occupied and owned by widows and minor 
children and of men above, say, sixty years of age, under the 
value of, say, one thousand dollars, should be exempt from tax- 
ation, for the reason that they neither are revenue-bearing 
property, nor do they, as a class, measure the income of the 



THE DISTRIBUTION OF WEALTH. 221 

owners. This property, by the conditions of its use and owners 
ship, may be readily distinguished and excepted, and there is no 
good reason why it should bear any part of the burden of the 
public revenues. 

TAXATION OP CREDITS. 

The attempt to tax credits has everywhere proven a failure. 
Being intangible, they elude the assessor, and not one-fifth of 
the credits of a State where the attempt is made to tax them 
are ever listed for taxation. In the country and in small towns 
the proportion of credits taxed is much greater than in cities. 
There is no uniformity, and there never can be. The burden 
falls most heavily on honest people, who pay a penalty for being 
more truthful than their fellows. 

In the year 1884 the valuation of credits, other than those of 
banks, bankers, etc., in Cook County, Illinois, which contains the 
great and wealthy city of Chicago, was only $209,476 ; while in 
the county of Knox, with a population in 1880 of 38,344, the 
same class of credits were valued at $793,819 ; in the county of 
La Salle, with a population in 1880 of 70,403, the valuation was 
$632,681 ; in the county of Winnebago, with a population in 
1880 of 30,505, the valuation was $725,218 ; in the county of 
McLean, with a population of 60,100, the valuation was $591,286, 
In the year 1888 the valuation of the same class of credits was, in 
Cook County, which then had a population of 1,000,000, $119,990 ; 
in Knox County, $346,541; in La Salle County, $532,070; in McLean 
County, $554,184 ; in Winnebago County, $636,688 ; while in the 
county of Edwards, with a population not one-hundredth part as 
great as that of Cook County in 1888, the valuation was $119,200, 
only seven hundred and ninety dollars less than that of Cook 
County. Clay County had $28,064, while the much larger 
county of Wayne adjoining had but $19,248, and the adjoining 
county of Efl&ngham, with a greater population and more 
wealth, had but $7813. In the same year the credits of banks, 
brokers, etc., of Cook County, are returned at $67,800, while the 
same class of credits in the county of Clay, with a population 
only about one-fiftieth part as great, are returned at $19,463; 
those of the larger adjoining counties of Wayne, Effingham, 
and Marion, at $3609, $315, and $12,117 j-espectively. There is, 



222 THE DISTEIBUTION OF WEALTH. 

indeed, no approximation towards a true valuation of credits of 
any kind. 

TJie tax on credits, so far as it is effective, is a double tax. B 
owns two thousand dollars' worth of property; A has one 
thousand dollars in money. Here then is three thousand dollars* 
worth of taxable property. But B borrows A's one thousand 
dollars, and gives to A his note for one thousand dollars ; the 
assessor lists the two thousand dollars' worth of property 
which B had at the start, and also one thousand dollars more 
in money or other property in which B may have invested the 
money he borrowed from A, and also the note for one thou- 
sand dollars given to A, making a total valuation of four thou- 
sand dollars. By this transaction between A and B the amount 
of the assessment has been increased in the sum of one thousand 
dollars, although the amount of property remains the same. 
Here is an injustice, the weight of which must fall on either one 
or the other, or on both the parties. It in fact falls upon the 
borrower ; the effect of taxation of credits is to raise the rate of 
interest. The money-loaner generally escapes the tax, the 
amount of which he saves as compensation for risk, or wear and 
tear of conscience in dodging. 

The rate of taxation varies greatly in different localities. In 
one village, or city, or school district it may be double the rate 
which is collected in another district or village near by. The 
rate of interest cannot be made to vary to correspond with 
these varying rates of "taxation. The lender of money will 
therefore either conceal his credits or adopt for his residence a 
locality where the rate is low. 

The borrower may reside in one State and the creditor in 
another, thus subjecting credits in the same locality to different 
rates of taxation. 

The tax on money should be retained, since such a tax, par- 
ticularly if credits are untaxed, tends to prevent hoarding. 

Banks should not be taxed on their circulation or their credits; 
they should be reached by reducing the rate of interest they 
may be permitted to collect. 

The rate of taxation on money should be uniform, — every- 
where the same, — so as to present no obstacle to its free circu- 
lation. A tax on money will always be more or less evaded ; 



THE DISTRIBUTION OF WEALTH. 223 

nevertheless, the value of such a tax, as a measure to prevent 
hoarding money and thus withholding it from circulation, 
justifies the imposition of such tax, notwithstanding the frequent 
evasions to which it would be subject. 

The only reason that can be urged for the policy of taxing 
credits is that such tax yields a revenue. It is, however, a 
revenue unjustly drawn from the borrower, who really pays the 
tax by way of increased interest. 

Instead of persisting in the ineffectual attempt to reach credits 
through revenue laws, we should reach them by means of usury 
laws. Let B pay the taxes on the tangible property which he 
owns, and let every other person do likewise j and, when all 
tangible property is taxed, there is no more property to tax. 
The sum of the tangible property of a country comprises its 
total wealth. When a government taxes credits it enters into 
partnership with the creditor to compel the debtor to pay the 
higher rate of interest necessary to satisfy the demands of both 
the creditor and the government. 

Continuing the foregoing illustration, the property which A 
did have, one thousand dollars in money, having been trans- 
ferred to B, in order to equitably apportion the burden of tax, 
B should have the benefit of a reduction in the rate of interest, 
which is now fixed on the assumption that A will be required 
to pay taxes on B's note. Under the present policy, A gets 
the interest, but, by evading the law, escapes the taxes. The 
tax on tangible property cannot be evaded; therefore let the 
tangible property, which is all the property owned by both A 
and B, be taxed ; but allow B to withhold a part of the interest 
which he now pays, in order to make sure that A does not 
escape from his just obligations. 

The present system is wholly in favor of the capitalist, and 
against the borrower and against the working-people. If 
Hodge be not too dull, he will change his tactics, and catch 
the coon at the other end of the log. 

In 1881 the Legislature of the State of Massachusetts passed 
an act exempting mortgages on real estate from taxation. The 
effect was an immediate decline in the rate of interest on mort- 
gage loans of nearly one-half of one per cent., and the decline 
which measures the full effect of the law amounts to about one 



224 THE DISTEIBUTION OF WEALTH. 

per cent, in the rate of interest on mortgage loans. There 
followed the enactment of this law a remarkable increase in 
building operations in Boston. The new buildings and altera- 
tions in 1881 amounted to $3,144,260, in 1882 to $8,918,969, and 
in 1889 they had increased to $17,120,779. The total value of 
real estate improvements in the period from 1882 to 1889 was 
$77,855,884 more than if the average of the two years preced- 
ing the passage of this act had been maintained.* That this 
increase in building is wholly attributable to the reduction in 
the rate of interest consequent on the enactment of the law 
exempting mortgages from taxation may not be claimed; but 
the reduction in the rate of interest was no doubt a principal 
factor in producing the result shown. 

The distinction made in the legislation of Massachusetts 
between mortgage loans and other credits is wholly arbitrary 
and not marked by distinction in principle. 

Taxes represent a certain portion of the annual product which 
is diverted to a designated use. The working-people, who 
create this product, pay the taxes. Those whose names appear 
upon the tax-list are the persons through whom the taxes are 
paid. The amount which they in fact pay is measured by the 
amount of their contribution to the total product and the rate 
of tax to which property is subject. 

The manner in which taxes are levied has much to do with 
the distribution of products, and the diversion of wealth and the 
prosperity of particular industries depends in great measure on 
the revenue policy of a country. 

The working-people, and particularly the poorer classes, who 
are erroneously supposed to pay but little tax, have a vital 
interest in the question as to how public revenues shall be 
raised. Eevenue systems should be judged by their effects upon 
the distribution of wealth, as well as by their effectiveness in 
accomplishing those ends which are supposed to lie within the 
scope of the direct purpose which they are intended to serve. 

By means of proj^erly-adjusted revenue laws, supplemented 
by the necessary limitations on rates of interest, it is practi- 
cable to prevent those gross aggregations of wealth which have 

* See Quarterly Journal of Economics, April, 1890. 



THE DISTRIBUTION OF WEALTH. 225 

grown up under existing policies. In many States constitu- 
tional amendments would be required, in order to admit of the 
introduction of the necessary revenue reforms. But present 
conditions will not be remedied without some radical departures 
from the course of legislation hitherto pursued. 



CHAPTEE YIIl. 

INTERNATIONAL TRADE — PROTECTION. 

In all ages and in all stages of civilization the habit of ex 
changing the product of one form of labor for the products of 
other forms of labor has existed. To the North American In 
dian, the African barbarian, and the wild Australian, trade is as 
habitual as with the civilized European. But to a civilized 
people, among whom there exists the utmost subdivision of 
labor, so that one individual consumes only a small part of the 
product of his own labor, and every person consumes a resultant 
product of the labor of many persons, exchange becomes an 
absolute necessity. Merchants, wholesale and retail, agents, 
factors, and traders of all classes become necessary in the busi- 
ness of distribution. The value of the services which they 
render to society is added to the price of the product which 
passes through their hands, and their wages are paid by the 
consumer. It becomes the interest of this class to promote ex- 
change, even beyond the demands of society. The greater the 
volume of trade, the greater the quantity and value of the 
products exchanged, the larger their profits. 

The service performed by this class requires a high degree of 
intelligence and skill. They constitute, therefore, one of the 
most influential classes of society, not only because of superior 
intelligence, but because, also, of acquired wealth. Their in- 
terests are always well guarded ; their influence upon legislation 
is prompt, persuasive, and eff'ective. The earliest writings upon 
the subject of political economy relate to commerce. How to 
promote commerce is a question that never retires from the 
arena of debate, nor withdraws from the chamber of legislative 

15 



226 THE DISTRIBUTION OF WEALTH. 

council. The highest moral considerations yield it precedence; 
and violated law and outraged humanity await their turn in 
patience and in silence. When trade makes its demands, it is 
not with the hesitating words of modest diflSdence, nor in the 
subdued tones of unpractised timidity, but with the loud assur- 
ance of accustomed command. And the popular mind appears 
to be thoroughly imbued with the idea that national prosperity 
is gauged by the volume and extent of commerce, and that 
whatever is done that promotes trade, promotes national pros- 
perity. To such an extent has this idea been cultivated, that 
boards of trade, whose principal business it is to speculate in 
future values, and conduct a seeming trade without any accom- 
panying exchange of products, are rated as men of business, 
and rank, in general esteem, as promoters of public interests. 

In the popular mind there seems to be a tendency to overlook 
the fact that the usefulness of trade has its limitations in the 
needs of the consumer and not in the needs of the merchant who 
conducts the business af exchange ; that it is possible to promote 
and carry on a commerce that serves no good purpose, except to 
yield revenue. to merchants and traders and transportation com- 
panies ; that a demand for products may be cultivated in the in- 
terests of those alone who derive a profit from buying and selling. 

America is a great country, with a variety of people, and 
possessing a capacious and hungry market that, with ostrich- 
like avidity, seizes every shining bauble that falls within its 
range. We are a people of generous consumers, with liberal 
purses. When John Bull rings the door-bell and calls for the 
lady of the 'ouse, he receives a civil answer; and when he opens 
his pack and displays his wares, " missus" is sure to find some- 
thing she wants, — and so cheap. There is no doubt but that if 
the products of foreign nations had free entrance to our markets, 
we should buy freely some things which we can do equally well 
without, and many more that we can more cheaply produce at 
home. We would ship back agricultural and manufactured 
products in paj-ment ; trade would be promoted ; traders, mer- 
chants, and transportation companies would make good profits ; 
but would the American people, as a whole, be benefited or 
injured thereby? This is the question involved in the issue. 

There always is an appearance of prosperity attending the 



THE DISTRIBUTION OF WEALTH. 227 

interchange of commercial products, and it is clear that the 
merchants who handle foreign trade in those cities which are its 
chief avenues enjoy opportunities for increased profits, which 
they do not neglect to improve ; but what are the advantages, 
or disadvantages, to the people at large ? Does the prosperity 
of the artisan, the mechanic, the farmer, and common laborer 
depend upon crowded docks, or may it be estimated by a count 
of masts in the harbor? 

To a country of small area, or a country of limited natural 
resources, — to a country like England or France, whose food- 
products are not adequate to the wants of the people, — foreign 
trade is essential. Trade between nations rests upon the same 
necessity as trade between individuals. If A has that which 
he does not require for his own use, but which B needs for his 
use, and B has that which he does not require for his own use, 
but which A does need, an exchange may be made which will 
be profitable to both. If A be a farmer, and B a blacksmith, 
it is more profitable to both that A should raise wheat for B, 
and that B should shoe horses for A, than that both should 
attempt to perform labor for which they are unfitted, and sup- 
ply their own wants without exchange of the products of their 
labor. But if, instead of A, we suppose a community of one 
hundred farmers, having interests and property in common, and 
contributing their labor to a common fund, and the labor of one 
blacksmith yields an annual product one-third greater in value 
than the labor of one farmer, then it would be to the interest 
of this community, instead of employing a smith outside of its 
own members, that one of themselves should learn the trade of 
blacksmith and thereby save the equivalent of one-third of the 
labor of one man. If England has that which the people of 
the United States need, and the United States have that which 
the people of England require, beyond the demands of home 
consumption, then there may be profitable trade between the 
two countries. If there are two articles, one of which may be 
produced at less labor-cost in England, and the other may be 
produced at less labor-cost in the United States, then a mutual 
exchange may be profitable to both. But if the reason of the 
higher cost in one country be because of the want of skilled 
labor, or the natural inertia of unskilled labor and its disposition 



228 THE DTSTEIBUTIOlSr OF WEALTH. 

to adhere to its accustomed pursuits, then it may be to the in- 
terest of that country to develop its unskilled into skilled labor, 
and save to itself the extra labor-cost required for the purchase 
of the product of skilled, with the product of unskilled, labor. 
The rule, that every nation should buy in the cheapest, and sell 
in the dearest, market, is subject to the more important rule of 
political economy, that it is the first duty of every nation to 
cultivate the highest capabilities of its own labor. 

The reason why we should buy our coffee from Brazil and our 
tea from China is sufficiently apparent. We are able to produce 
neither at home, without the most unprofitable expenditure of 
labor. We buy silks from France and ivory from Africa for the 
same reason. By so doing we may procure silk at one-half the 
labor-cost that would be required to produce silk in the United 
States. But why should we buy coal and iron in England? 
The coal-merchant in a city on the coast of Maine or Massachu- 
setts may be able to purchase a supply of coal for less money 
than he could procure it from Pennsylvania. (We import nine 
hundred thousand tons annually.) We import annually over 
fifty million dollars' worth of the products of iron and steel 
This is nearly all brought from England. The trader who imports 
it pays for it with gold and silver, — so much money. The price 
is less than he would pay at home. The traders who buy this 
coal and iron do not ask, " What will you buy in return ?" they 
do not stop to inquire in what way the balance of trade will be 
preserved. Their interest begins and ends with their own trans- 
action. When the farmer purchases one hundred dollars' worth 
of dry goods, he pays one hundred dollars in money ; but he 
must sell to some one one hundred dollars' worth of agricultural 
product to cover that purchase of dry goods. He may not sell 
to the same merchant, nor in the same village ; but he must sell 
somewhere and to some person, and preserve his " balance of 
trade." 

In the year 1887 the people of the United States purchased 
in Brazil commodities amounting to $52,953,176, but sold in that 
country products to the amount of only $8,127,883. But dur- 
ing the same period the exports to Great Britain amounted to 
$366,310,679, while the imports from Great Britain amounted to 
only $165,067,443. This account balanced would show the people 



THE DISTRIBUTION OF WEALTH. 229 

of Great Britain in debt to the people of the United States in the 
sum of $201,243,236. But the exports of Great Britain are in 
excess of its imports in its trade with Brazil, Germany, Italy, 
Holland, Central America, Mexico, and other countries. In the 
trade between two countries exports and imports may differ 
widely in amount, as in the case of the United States and 
Brazil ; but the excess of imports from one country is balanced 
by an excess of exports to another country. The United States 
buys coffee in Brazil ; sells wheat and flour to England, which 
ships iron and steel and cotton and woollen fabrics to Brazil. 
The entire trade may be conducted without shipment of any 
very large sums of money, by means of bills of exchange. 

The statistics of British trade show that her annual imports 
are greatly in excess of her exports. During the twenty years 
ending December, 1880, there was imported into Great Britain, 
in excess of exports, $7,540,000,000 worth of products, of which 
$4,680,000,000 worth was imported during the decade ending 
December, 1880, which is equivalent to $468,000,000 per year. 
We must not infer from this showing that the people of Great 
Britain incurred debt for the amount of this excess of imports, 
nor that they sent abroad $7,540,000,000 in gold and silver to 
pay the account. This excess of imports means that British 
capital is invested abroad in large amounts, and that it yields 
an annual revenue of $468,000,000. The yield of British foreign 
invested capital in the form of dividends or interest in 1883 was 
as follows : 

Colonial loans 137,000,000 

Indian " 31,000,000 

Indian and colonial railways 46,500,000 

Toreign loans and railways 128,500,000 

Total $243,000,000 

To the above should be added moneys loaned on mortgage in 
Australia, Brazil, and other countries, and much capital other- 
wise invested. 

The exports and imports of American commerce at the pres- 
ent time are nearly equal in amount, the excess of exports in 
1887 amounting to about twenty-four million dollars. There 
has been an annual excess of exports over imports since 1873, 



230 THE DISTEIBUTION OF WEALTH. 

except the year 1875. From 1850 to 1873, inclusive, imports 
exceeded exports, the balance against the United States being 
met by the export of bullion. The excess of exports during the 
last twenty years is explained by the fact that large amounts 
of American bonds are held in Europe, and we have been pay- 
ing interest with wheat, corn, and meat. 

Some product of American labor must be sold abroad to pay 
for the coal and the iron which we import. What shall it be, — 
our principal export, bread-stuffs ? of which in 1887 we exported 
one hundred and sixty-six million dollars' worth. In 1887 
we exported one hundred and two million bushels of wheat 
at a fraction less than ninety cents per bushel at the port of 
shipment. Saying nothing about railway freights, it required 
sixty million bushels of wheat delivered at seaboard to pay for 
that iron and coal, without including the cost of transportation. 
The production of this sixty million bushels of wheat, estimated 
on the basis of the cost of agricultural products in this country 
as shown by the census of 1880, represents a year's work of one 
hundred and ninety thousand laborers ; and, according to the 
same census the products of iron and steel, which were im- 
ported to the amount in value of fifty-four million dollars Eng- 
lish prices, or eighty million dollars American prices, required the 
labor of less than one hundred and fifteen thousand laborers. 
In the round of exchange we have traded the labor of five men 
for the labor of three men; and yet we have bought in the 
cheapest market and sold in the dearest. The same relation 
exists between the labor-cost of the products of agricultural 
labor and the products of skilled labor and machinery in other 
manufacturing and mechanical industries. 

The same year we imported $7,300,000 worth of glass and 
glassware, which at American prices amounted to $10,950,000. 
This product represents the labor of twenty thousand four 
hundred persons, of whom one-third were women and children. 
It may be said, therefore, to represent the labor of about seven- 
teen thousand men. We paid for it in agricultural products 
with the labor of twenty-four thousand three hundred men, and 
paid transportation charges on agricultural products besides. 
We imported $44,000,000 worth of manufactured woollen goods, 
of which sum $17,000,000 was the product of labor in manu- 



THE DISTRIBUTION OF WEAX.TH. 231 

facturing, allowing $27,000,000 to the credit of materials. A 
product of $17,000,000 in the woollen goods industry at Eng- 
lish prices, or $28,390,000 at American prices, represents the 
labor of forty thousand four hundred and fifteen persons, of 
whom one-eighth are children under fifteen years of age, and 
over one-third are women, — more than three-sevenths are women 
and children. We may say this product represents the equiva- 
lent of the labor of thirty-two thousand men. To pay this seven- 
teen million dollars in agricultural product required the labor 
of more than fifty-six thousand men, and we paid the cost of 
transporting agricultural product to seaboard besides. To the 
extent that we pay in manufactured products, the foregoing 
deductions do not apply. But our imports of manufactured 
products are nearly all paid for in the products of agriculture.* 

In arriving at the results here given, I have not taken into 
consideration the capital employed in the production of man- 
ufactured products, nor the capital employed in agriculture, 
which is relatively much larger than that employed in man- 
ufacturing, for the respective products contrasted. Nor have I 
considered the wear and waste of machinery, buildings, etc., in 
either industry. There is probably no great difference, com- 
paring the two branches of industry, in proportion to value of 
product. I have estimated the agricultural product at three 
hundred dollars per year for each full hand. The basis of this 
estimate will be found in the chapter giving statistics of pro- 
ductions of agriculture. The figures may be varied somewhat 
by the actual facts, could they be ascertained more accurately ; 
but the relations of the industries are substantially as shown. 

Had the rate of duty been low our imports would have been 
greatly increased, making it necessary to export a correspondingly 
increased amount of agricultural product. And, since the price 
■falls as the supply increases, the price received for the exported 

* In the manufacturing industries the average annual product in 1880 was 
seven hundred and twenty-one dollars and ninety-three cents per worker, 
while in agriculture it was two hundred and eighty-eight dollars and forty- 
five cents per worker, the product per worker being two and one-half times 
as great in the former as in the latter. If we pursue the policy of purchasing 
manufactured goods abroad it will at once appear at what expense of labor 
we must do so. 



232 THE DISTKIBUTION OF WEALTH. 

product would have been still lower, and the cost of imports, 
measured in labor, would have been relatively higher, thus 
increasing the ratio, already great. 

The question, then, that confronts us is, Shall we continue to 
use the products of foreign manufacture, and pay for them 
with the products of agriculture, or shall we do our own manu- 
facturing? Shall we plough corn and hoe potatoes two days, 
or work one day in the mill, the factory, or the mine ? 

So long as we continue our foreign importations, the diversion 
of labor from agriculture to manufacturing industries, the con- 
version of common into skilled labor, will proceed but slowly. 
The agriculturist will struggle on, year by year, endeavoring to 
increase his income by raising more wheat and corn and cattle, 
and continue to defeat his aim by overweighting an already 
overburdened market. He may attempt to reduce the price of 
manufactured articles by unlocking our ports to foreign trade ; 
but it has always been true, and will remain true, that skilled 
labor employed in manufacturing industries will command 
higher prices than the unskilled labor that finds employment in 
the field of agriculture; money will flow to manufacturing 
centres, and go out again in the form of investments in stocks 
and mortgage-loans, drawing interest at a rate that absorbs the 
savings of the people. 

The remedy must be found in the conversion of unskilled 
into skilled labor, a low rate of interest on capital, and other 
measures of a kindred character, suggested in other chapters. 
Wages may be thereby forced nearer to a common level, while 
the general average of wages will be raised, and the power of 
capital diminished. What is required is a tariff that will pre- 
serve to our own people the American market for those articles 
of manufacture or of agriculture which may be produced at 
home, at a labor-cost not greater than that which is required to 
effect their purchase by means of the exchange of the products 
of unskilled labor. I am able to perceive no other means by 
which this most desirable result may be accomplished. The 
history of the relations between the industries, and between 
capital and labor, in all nations, goes to show that leaving 
industries free and untrammelled does not accomplish it. 

If we seek — as we must, if we find a remedy for existing 



THE DISTEIBUTION OF WEALTH. 233 

evils — to establish a national policy which will, in a measure, 
control the distribution of labor in the interest of a more equita- 
ble distribution of its rewards, we must dissever ourselves from 
the influence of economic conditions which direct the industries 
of foreign nations, whose policy is shaped by no such aims, 
where no such purpose is entertained, and where old-established 
conditions, indurated customs, and long-stifled aspirations ob- 
struct the way to industrial reform. 

Mill, in his " Political Economy" (vol. ii. page 532), says, — 

" It was shown, however, in our analysis of the effects of 
international trade, as it has been often shown by former writers, 
that the importation of foreign commodities, in the common 
course of traffic, never takes place, except when it is, economi- 
cally speaking, a national good, by causing the same amount 
of commodities to be obtained at a smaller cost of labor and 
capital to the country. To prohibit, therefore, this importation, 
or impose duties which prevent it, is to render the labor and 
capital of the country less efficient in production than they 
would otherwise be, and compel a waste of the difference 
between the labor and capital necessary for the home produc- 
tion of the commodity and that which is required for producing 
the things with which it can be purchased from abroad. 

" The amount of national loss thus occasioned is measured by 
the excess of the price at which the commodity is produced, 
over that at which it feould be imported. In the case of manu- 
factured goods, the whole difference between the two prices is 
absorbed in indemnifying the producer for waste of labor or of 
the capital which supports that labor. Those who are supposed 
to be benefited — namely, the makers of the protected articles 
(unless they form an exclusive company, and have a monopoly 
against their own countrymen as well as foreigners) — do not 
obtain higher profits than other people. All is their loss to 
the country as well as to the consumer." 

The foregoing is a statement, in general terms, of what is 
known as the doctrine of free trade, as held by writers of that 
school of political economists. It is not unusual for advocates 
of this theory to preface their remarks with some such language 
as that employed by Mill, " as it has been often shown by 
former writers." Had Mill been able, by a satisfactory analysis 



234 THE DISTEIBUTION OF WEALTH. 

of the principles of international trade and the laws of produc- 
tion, to show the truth of the doctrine which he embodies in 
such broad generalizations, he doubtless would have done so, 
instead of tendering the conventional excuse which is here 
offered in lieu of a clear analysis of principles. Mill's reference 
to his analysis of the effects of international trade does not assist 
us. He does show, as he claims, that in one sense the importa- 
tion of foreign commodities does not take place, except when 
such commodities may be obtained at a smaller cost of labor 
and of capital than that for which they may be produced by the 
country importing. But in what sense, and according to what 
measure of cost ? The answer is. When capital is measured by 
prevailing rates of interest, and the value of labor is measured 
by the money standard of wages of the class of laborers employed 
in the -production of the commodities impoHed. For instance, 
suppose the United States to be an agricultural country, and 
England to be a manufacturing country ; the wages of persons 
engaged in agriculture in the United States to be one dollar per 
day, and the wages of persons engaged in manufacture in Eng- 
land one dollar and fifty cents per day ; the interest value of capi- 
tal in the United States to be six per cent., and the interest value 
of capital in England to be four per cent. ; the wages of persons 
engaged in manufacturing in the United States to be two dollars 
per day. Fix the number of working-days at three hundred 
per year. We will take a manufactured product that consumes 
the labor of one hundred men working one year, and requires 
one hundred thousand dollars capital. The cost and value of 
the product (omitting materials) in England will be as follows : 

Labor of 100 men one year, at ^1.50 per day each . . |45,000 

Interest on $100,000 one year, at four per cent, . . . 4,000 

Waste of capital (to replace machinery, etc.) . . . . 4,000 

Total value of product of labor and capital . $53,000 

The cost of the same product manufactured in the United 
States will be as follows : 

Wages of 100 men, at $2.00 per day, for one year . . $60,000 

Interest on $100,000 capital, at six per cent 6,000 

Wear and waste of buildings, machinery, etc. . . . 6,000 

Value of product $72,000 



THE DISTRIBUTION OF WEALTH. 235 

Here exist the conditions which, according to Mill, render the 
importation of the English product of manufacture into the 
United States profitable to both countries. A higher rate of 
interest and a higher rate of wages in manufacturing industry 
has increased the cost (measured in money, but not the cost as 
measured by amount of labor expended) of the American over 
the English product. 

Let us carry the doctrine of Mill into the field of practical 
operation and observe the result. Since, in agriculture, a part 
of the capital employed is land, which is not the product of 
labor, we will assume that only one-half of the capital employed 
is the product of labor, and the other half land, the total capital 
being the same as that used in manufacturing as compared with 
product, although it is in fact much greater. 

The result of the labor of one hundred men employed in agri - 
culture, and working one year at the wages stated, would be as 
follows : 

Wages of 100 men one year, at |1.00 per day .... |30,000 

Interest on $50,000 capital, at six per cent 3,000 

$50,000 capital in land, interest value six per cent. . 3,000 

Waste of capital per annum 8,000 

Total value of agricultural product $89,000 

Now, if we desire an agricultural product suflScient to purchase 
the $53,000 worth of English manufactured goods, since $53,000 
is 1.359 times $39,000, we must multiply each of the above items 
hj 1.359. We obtain as the result : 

135.9 men one year, at $1.00 per day ........ $40,770 

$67,950 capital, at six per cent 4,077 

Waste of capital 4,077 

Six per cent, on $67,950 (value of land) 4,077 

Total value of product $53,001 

Now, if we exchange this agricultural product for the Eng- 
lish manufactured product, the market value of each being the 
same, there is a loss to American labor of twenty-six per cent., — 
that is, it requires 135.9 men to produce what is exchanged for 
the product of one hundred men. 



236 THE DISTEIBUTION OF WEALTH. 

This labor that is lost, rated at one dollar per day, amounts to 
$10,770 ; valued at $1.50 per day, the price assumed for English 
manufacturing labor, it amounts to $16,155. 

By reason of the use of land in production there is a saving 
of the use of $32,050 of labor-created capital, which at six per 
cent, amounts to $1830, and the net result is a loss to the 
people of the United States of $8940, or $14,325, according to 
which standard of wages we adopt as the measure of the value 
of labor. The true measure, however, of the loss or gain is the 
amount of labor saved or lost. Stated in terms of labor, there is 
a loss of twenty-six per cent. 

To purchase of the American manufacturer the same product 
(that is, the product of the labor of 100 men) as was purchased 
from the English manufacturer for fifty-three thousand dollars, 
would require, on the basis of the wages and interest assumed, 
seventy-two thousand dollars, which would require the product 
of the labor of 184.6 men employed in agriculture. It would, 
therefore, apparently be to the interest of the agricultural class 
— regarding those engaged in agriculture as a distinct class, and 
Ignoring the movement of labor from one industry to another — 
to purchase of England; and yet it is nevertheless clearly in 
the interest of an increased total production of American wealth 
to purchase of the home manufacturer. The increase of the 
wealth of a nation dej)ends upon production, but the increase 
of the wealth of any class of producers depends not only on 
production, but also on distribution. 

But that which may be to the apparent interest of a class, 
and which may be to their immediate interest, may be far from 
their true interest. If the exchange of the products of American 
agriculture for the products of English manufacture be not 
interrupted in some manner, the conditions which bring about 
such exchange on unequal terms tend to perpetuate themselves 
indefinitely, as the history of these two classes of industry 
abundantly shows. 

Adam Smith, speaking of the wages of labor, says, " The 
wages of labor in a great town or its neighborhood are fre- 
quently a fourth or a fifth part — twenty or twenty-five percent. 
— higher than at a few miles' distance. Eighteen pence (36 
cents) a day may be reckoned the common price of labor in 



THE DISTRIBUTION OF WEALTH. 237 

London or its neighborhood. At a few miles' distance it falls to 
fourteen and fifteen pence. Ten pence may be reckoned its 
price in Edinburgh and its neighborhood. At a few miles' 
distance it falls to eight pence, the usual price of common 
labor through the greater part of the low country of Scot- 
land, where it varies a good deal less than in England." And 
yet, at the time of which he wrote (1775), he says, " Grain, 
the food of the common people, is dearer in Scotland than in 
England." 

In 1835 the average wages of a day-laborer in agriculture 
were, in England twenty pence, Scotland sixteen pence, Ireland 
eight pence ; in 1880 the rate was, England thirty pence, Scot- 
land twenty-eight pence, Ireland eighteen pence. The average 
annual earnings of the working-class in 1882 were, in England 
$305, Scotland $247.50, Ireland $121.75. Jn 1882 the wealth of 
England was $35,890,000,000, that of Scotland $4,950,000,000, 
that of Ireland $2,760,000,000 (Mulhall). The foregoing statis- 
tics illustrate the relative power of manufacturing and agricul- 
ture in accumulating wealth. 

JN'ow, suppose that, instead of buying the products of manu- 
facture abroad with the products of agriculture raised at home, 
we convert the necessary amount of agricultural labor required 
to produce the fifty-three thousand dollars' worth of manufact- 
ured product into manufacturing labor. The land we cannot 
convert into other forms of capital, so we have the labor of 135.9 
men and $67,950 of capital to employ in manufacturing. To 
make up the requisite amount of capital corresponding to the 
number of men, it will require the sum of $135,900. We already 
have $67,950, and we must create or borrow $67,950 more, 
to replace the land which we may suppose to lie idle. The 
result will be, — 

Labor of 135.9 men one year, at |1.50 per day . . . $61,125 
Interest on capital, |135,900, at four per cent. . . . 5,436 

"Wear of machinery 5,436 

Total value of product (English prices) . . . $71,997 

Subtract additional cost of American capital, which 

would be two per cent 5,436 

Net product of labor and capital $66,561 



238 THE DISTRIBUTION OF WEALTH. 

Brought forward |66,561 • 

Value of the agricultural product of same labor and 
capital before it was converted, measured in Eng- 
lish manufactured product for which it exchanged 
153,000, to which we add $4177, six per cent, on 
the additional capital called into use, and we have . 57,177 

Net gain from conversion of labor |9,384 

I have carried the element of interest on capital into the 
foregoing analysis, not because it belongs there, but because we 
are accustomed to regard interest as a part of the cost of pro- 
duction. Interest, however, when we are considering the cost 
of production to a whole people, is not a part of the cost of 
production, unless capital borrowed from a foreign people be 
employed. When regarded in any problem embracing the 
nation at large, interest is an element of distribution, and does 
not represent consumption of capital, but merely a transfer of 
product from one person to another. The wear and waste of 
buildings and machinery in either country, measured in labor, 
is the same. So that the real gain is the labor that is saved, 
which, measured by the value of the product, is $16,125. 

'Now, while the value of a certain amount of labor in one 
country, measured by the quantity of product, is the equivalent 
in value of a like amount of labor of the same grade in another 
country, except as natural advantage of location or climate may 
somewhat increase the productive power of the labor in one 
country above that of an equal amount of labor in another 
country, yet, in the conversion of the cheaper into the more 
productive, and therefore more valuable, forms of labor, there 
is a very great gain. 

The mistake of writers on this branch of political economy 
consists, first, in ignoring the facts that the value of labor de- 
pends upon how it may be employed ; that the value of different 
classes of labor, when measured in the price of the product, 
varies widely, and that the cheaper forms of labor may be 
readily converted into the more valuable forms ; and, secondly, 
in treating interest as an element of the cost of production 
(which as between individuals it is), and not as merely a factor 
in the process of distribution. 

Eeducing these deductions to the form of an abstract general- 



THE DISTRIBUTION OF WEALTH. 239 

ization, I would say that it is not to the interest of any people 
to produce a commodity requiring an amount of labor relatively 
large in proportion to value of product, for the purpose of export 
and exchange for the product of another form of industry 
representing an amount of labor relatively small according to 
value. Whenever a necessity exists which compels the exchange 
of the product of two days' labor for the product of one day's 
labor, true economy requires a policy that will remove that 
necessity. 

Labor does not readily transfer itself from one industry or 
form of production to another. Common labor and labor 
employed in agriculture will continue to be so employed until 
converted by capital into other forms of production. The fact 
that it may be to the interest of a people, as a whole, to create 
and carry on a particular industry, is not alone sufficient to 
divert labor and capital into such new industry. Capitalists 
must first be convinced that such industry will yield the usual 
profits on the capital invested ; or else a reduction must first 
take place in the profits on capital invested in the industries 
in general, by which the average rate of profit on capital is 
brought below that which the industry sought to be introduced 
may be made to yield. 

While it was clearly to the interest of the people of the 
United States to do their own manufacturing, yet so long as 
capital could be more profitably employed in other ways it was 
not to the interest of capital to engage in manufacturing ; or, 
rather, it was not to the interest of any particular capitalist to 
do so. The imposition of a high tariff on cloth, and on iron and 
steel, brought the profits of capital employed in the manufact- 
ure of these j)roducts up to or above the general level of the 
profits of capital otherwise invested. 

The result of a high tariff was a phenomenal growth of all 
protected industries. By the transfer of labor from one industry 
to another the productive power of American labor was wonder- 
fully increased. There followed a corresponding increase in 
national wealth, and also a corresponding aggregation of wealth. 
This great increase of wealth represents so much labor saved by 
changing it into more productive forms. 

The natural effect of this great increase of wealth would have 



240 THE DISTEIBUTION OF WEALTH. 

been, by force of the competition of accumulated capital, em- 
ployed and seeking employment in manufacturing industries, to 
force profits to a much lower rate than has been reached. But 
the building of railways, the issue of a large amount of govern- 
ment, State, and municipal bonds, the disposition of the agri- 
cultural classes to employ borrowed capital to invest in agri- 
culture and increase the volume of the product already equal to 
the demand at a fair price, and other openings for the invest- 
ment of capital at a high rate of profit, have enabled manufact- 
urers to maintain a margin of profit much greater than they 
otherwise could have done. 

The equilibrium of the industries has been disturbed by causes 
growing out of the late war, the rapid introduction of machin- 
ery, and the extension of the agricultural area. The rapid 
growth of wealth, instead of weighing down the profits of man- 
ufacturing, as it must have done under other conditions, has 
been absorbed by other industries and other enterprises ; and 
manufacturing has been relieved from a burden of competition 
that of its own weight would have borne down prices of the 
products of manufacture to a point more nearly approximating 
the value of the product of an equal amount of capital employed 
in agriculture. 

The amount of capital accumulated in other industries, and 
aggregated by speculation, which has been loaned on farms, 
much of it at a high rate of interest, has of itself been large 
enough to so increase the product of agriculture as to greatly 
reduce the value of the product of that industry in the market ; 
and thus, by lowering the price of food, relatively enhancing 
the value of the products of manufacture. 

The rapid extension of the cultivated area, for which unoccu- 
pied public lands furnished the opportunity, is largely attrib- 
utable to the effect of investments of accumulated capital in the 
form of mortgage-loans on agricultural lands. 

There has been a glut of wealth which has not been properly 
assimilated by the various industries, and agriculture has been 
the principal sufferer. A more healthy condition will, in time, 
be brought about by the unaided and unhindered operation of 
economic forces ; but the present condition tends greatly to aid 
the process of aggregating the wealth of the country. 



THE DISTRIBUTION OF WEALTH. 241 

So far, we have considered the effect upon production of a 
diversion of labor from one form of industry to another. We 
have shown that the product is greatly increased by a con- 
version of cheap labor into labor of a higher grade, or by the 
conversion of labor engaged in the production of low-priced 
commodities into labor producing high-priced commodities. It 
remains to consider the effect upon distribution. 

Withdrawing labor from any industry tends to reduce the 
product, and thereby to increase the price of the product of such 
industry ; while increasing the amount of labor employed in an 
industry increases the product and reduces the price. Prices 
in the several industries, therefore, tend to approach a common 
level ; and the prices of labor in all industries would attain a 
common standard if the operation of this tendency were not 
obstructed by certain causes. What are they ? First, different 
forms of production require different degrees of intelligence and 
skill, and skilled labor does not come in direct competition 
with unskilled labor. Coiumon labor cannot be converted into 
skilled labor at will, but must await the slow process of educa- 
tion and training. The immediate interest of skilled laborers is 
to prevent the increase of skilled labor. The process of edu- 
cation and industrial training is therefore hindered, not only 
by the natural difficulties that attend the education of a people, 
but also by the opposition or indifference of those who already 
oecujDy the field of employment in the higher grades of industry.* 

There is another more potent influence. Capital employed in 
agriculture is fixed. Much of it — indeed the greater part — 
cannot be withdrawn at all, and the remainder cannot be readily 
withdrawn. It is chiefly in the hands of those whose labor is 
employed in production, and it is impracticable to greatly reduce 
the labor force employed, so as to keep production within the 
limits of the effective demand, at a price sufficient to yield a 



* The mistaken policy of discouraging the apprenticeship of boys and 
young men in the mechanical trades with a view to maintaining wages has 
been generally pursued, and in consequence we have been receiving annu- 
ally from Europe large numbers of skilled artisans to occupy the places 
which should be filled by artisans educated at home. The true policy is to 
encourage industrial training. 

16 



242 THE DISTRIBUTION OF WEALTH. 

liberal compensation for the labor employed and a fair profit 
on the capital invested. 

In manufacturing industries, when prices tend downward, the 
labor force, as well as the capital employed, may be readily 
reduced. As the capitalist and the laborer are not, as they 
generally are in agriculture, the same person, the labor-force 
may be reduced without serious detriment to the controlling 
force, capital ; and the requisite amount of capital may be with- 
drawn, and invested whenever an opportunity for greater profit 
may invite. 

To the individual agriculturist, production varies with the 
changing seasons, and values are unstable. The amount of the 
product cannot be regulated to meet a known demand, nor 
estimated beforehand. When the product is ready for the 
market, it must be sold at a price fixed by conditions not within 
the control of the producer. While the manufactured product 
is often sold before made, the price fluctuates within narrow 
limits, and when the market is heavy the manufacturer may 
hold his product longer to await a more active demand ; for his 
commodities will keep, and may be cheaply stored. When the 
farmer's hogs or horses or cattle are matured, they must be 
sold ; for the cost of keep will always soon outrun an advance 
in market values. When the farmer sells his wheat, corn, or 
cattle, he asks, " What will you give ?" The manufacturer and 
the merchant says what he will take. While, therefore, agri- 
culture, as an industry, possesses many advantages, it is also 
attended by disadvantages inherent in fixed conditions. 

When laborers are thrown out of employment in other indus- 
tries, they resort to the field of agriculture, where they may 
produce at least their own food and a small surplus for the 
market. This is to the advantage of those who would otherwise 
be without means of subsistence, but a detriment to agriculture, 
the industry on which at any time may be precipitated the un- 
employed labor of other industries which, when prices go down, 
relieve themselves of a superabundance of labor at its expense. 
Land, however, is a limited, fixed quantity. The area of cultiva- 
tion will soon reach the limit beyond which it may not extend. 
The demand for food-products will begin to approximate the 
limit, beyond which production can be increased only by an 



THE DISTRIBUTION OF WEALTH. . 243 

active demand for more food. Agricultural values will then 
acquire greater stability, and, while they will continue to fluctu- 
ate, it will be within more narrow limits. Ordinary economic 
forces will then operate, with effect, to restore a greater equi- 
librium of values, except in so far as prevented by the power of 
aggregated capital to restrain or pervert natural tendencies. 

It is with a view to the destruction of the power of aggre- 
gated wealth to control values that many are turning their 
attention towards the abolition of protective duties. But should 
they accomplish their purpose, it will be but another instance 
of Samson pulling down the temple to destroy the Philistines. 
The abolition of protective duties would undoubtedly to some 
extent reduce the j)rices of the products of manufactures. This 
reduction of prices, it is claimed, would be brought about by the 
importation of the products of foreign manufacture. But what 
would be the ultimate results ? What we buy abroad we have 
no need to produce at home. The product of American manu- 
factures would therefore fall off, and the weaker establish- 
ments now doing business on a narrow margin of profit give 
way. We would in time, in some measure, divide the foreign 
trade with England and other countries, at prices below those 
at which foreign markets are now supplied. In a foreign trade 
England enjoys this advantage: she needs that which her 
foreign consumer has to sell, — food, — while, except as to a few 
commodities, our home food-supply is already more than ade- 
quate to the demand. A sale of the products of our manufact- 
ures in foreign countries, beyond the amount of our present 
sales, means the purchase of an increased amount of foreign 
products to be placed on our markets in competition with our 
established agricultural industries, and a consequent fall in 
prices. The reduction of duties on products of foreign manu- 
facture means, in the first instance, a reduction of the labor- 
force employed in manufacturing at home, and an increase of 
agricultural laborers ; it means the conversion of labor of high 
productive value into common labor of low value ; it means a 
disarrangement of values, doubt, hesitation, and distrust, until 
after such time as may be required for a readjustment ; it means 
the reduction of all wages and of all values to a lower level, and 
a consequent relative enhancement of the value of credits ; it 



244 THE DISTRIBUTION OF WEALTH. 

means more labor and more property to pay the same debt ; it 
means a wreck, from which the strongest will gather the salvage, 
— a wreck in which labor will lose and from which capital will 
gain. When the debris is cleared away, Samson will be found 
buried beneath the pillars of the temple, and a few Philistines 
will be found alongside; but a crowd of Philistines will view 
the ruins and rejoice that Samson is dead. 

If there be any remedy for the present inequitable distribution 
of the products of labor, for the absorption by capital of the 
savings of labor, that remedy must be found in legislative re- 
strictions, modes of taxation, and in industrial training. 

The control which the people of the United States may ex- 
ercise by means of legislation over social and economic tenden- 
cies is confined to the limits of our own country. But if Amer- 
ican labor is compelled to compete, in an open market, with all 
grades and classes of labor throughout the world, then American 
labor must rest content to accept a scale of prices determined 
by conditions which exist in other countries, and which we have 
no power to change. The less we are subject to the influence 
of economic forces, determined by inequalities of wealth and 
social condition that exist abroad, the more effective will be the 
measures upon which we must rely for an escape from that 
bondage of eternal poverty which is the fate of laboring mil- 
lions in Europe. Foreign trade we need, to the extent that loe 
need the products of foreign countries^ but not for the purpose of 
carrying on a war of competition between American and Euro- 
pean labor. In such a contest, as I have shown elsewhere, the 
gain is to the people whose production, measured by the amount 
of labor employed, is relatively large, and the loss is to the 
people whose consumption is relatively great. 

It is frequently asserted that the immigration of foreign 
laborers has the same effect upon American labor as the free 
importation of the products of foreign labor. This is, in a 
measure, true ; and there should be some restriction upon immi- 
gration. We cannot afford to permit the United States to be 
made a dumping-ground for the paupers and criminal classes of 
Europe. But the average European in America soon becomes 
an American. He adapts himself to his new environment, and 
is subject to the laws of production and of distribution which 



THE DISTRIBUTION OF WEALTH. 245 

prevail here ; and legislation that could not reach him in Europe 
will reach him as an American citizen. 

When, in any year, the number of immigrants is very large, 
the equilibrium of labor values is disturbed, wages are reduced, 
or labor is idle. In order that absorption and assimilation of 
foreign labor may keep pace with immigration, we should in 
some manner guard against the too raj)id increase of our foreign 
population. During the last two decades immigration has been 
invited and encouraged in a manner which ought not to have 
been permitted. But the American people have always ap- 
peared in haste to see their unoccupied lands settled and under 
cultivation. Whatever measures would stimulate the growth 
of the country and swell the census roll it has been considered 
good statesmanship to adopt. The resounding platitudes of 
Fourth of July oratory have not been without effect in shaping 
national legislation. 

In England, until after the time when manufacturing in- 
dustries in that country had reached a stage of development 
that made protective duties unnecessary and ineffective, the 
policy of protection was rigidly adhered to. The agriculturist 
was protected by duties on corn and meat, and the manufact- 
urer by various duties and restrictions designed to place him 
in the position of greatest advantage in competition with foreign 
products. The agricultural area of Great Britain was not, 
however, sufficient to supply the food-products required by the 
large and growing population of that densely-populated country ; 
and owing to the limited land area the effect of protective duties 
on agricultural products was not marked by a corresponding 
increase of the product protected, — a result which it is one of 
the chief objects of a protective duty to accomplish ; and, since 
the lands were in possession of a few landlords, the duty was 
necessarily at the expense of the working-people, and in the 
interest of those who were already enriched by means of an 
oppressive monopoly, and to whom a protective duty afforded 
the opportunity for still greater exactions, such a policy could 
be maintained only until its effects were oppressively felt and 
clearly perceived. 

By the aid of protective duties, far less needed in that country 
than in this, the manufacturing industries of Great Britain 



246 THE DISTRIBUTION OF WEALTH. 

were rapidly developed and carried to tlie highest degree of 
perfection. When this result had been reached, the protective 
policy had served its purpose and was no longer required. The 
interests of the English people demanded foreign trade; the 
sale of manufactured products abroad was absolutely necessary, 
in order to enable them to procure the food which the agricul- 
tural area of that country was not adequate to produce. Eng- 
land had become able to compete with every other country in 
foreign markets; no other people could successfully compete 
with her in her own. Protective duties were no longer neces- 
sary ; nor could a policy of restraining the importations of the 
same class of products that the English manufacturer was 
offering for sale in every foreign mart be pursued, without 
sanctioning a doctrine which had ceased to be useful to the 
English people, and which it had become their interest by every 
means to discourage. 

The conditions which make protective duties available to 
promote the industrial welfare of a people have in England long 
since ceased to exist. The protective policy of other countries 
is of course detrimental to English interest, since by it the 
market for English manufactures is restricted, and manufactures 
which represent the highest and most valuable form of labor 
are the only products of considerable value which England has 
to sell. 

It is not, therefore, surprising to find English economists, 
with scarcely an exception, insisting that absolute free trade 
is the only policy consistent with the true principles of economic 
science, and as far as England or English interests are concerned 
they are undoubtedly right. With the development and growth 
of manufacturing skill throughout the world, the prosperity of 
England, and of every country whose food-product is limited 
below the requirements of her population, must decay. Her 
position depends on inequalities of industrial development 
among the nations of the earth. 

In the United States the pohcy of protection was inaugurated 
immediately after the organization of the government, by the 
levy of duties on imports ranging from ten to fifteen per cent. 
These duties at the beginning of the war of 1812 were doubled. 
In 1816 an act was passed reducing the rate and establishing 



THE DLSTRIBTJTION OF WEALTH. 247 

what was regarded as a moderate protective tariff. The sudden 
transition from the high duties that had prevailed to compara- 
tively low rates occasioned a serious disturbance of industry, 
which had been greatly stimulated by the high tariff that was 
repealed. The act of 1816, with few substantial changes, re- 
mained in force until 1824, when what was known as the Clay 
tariff act was passed, imposing new duties and raising those on 
most woollen goods. In 1828 there was an increase of duty on 
many articles, and in 1832 an act was passed reducing the rates 
on some articles and raising them on others. 

In 1833 what was known as the Clay compromise tariff was 
adopted. This act provided for a reduction of all rates in excess 
of twenty per cent, to twenty per cent, ad valorem, by remit- 
ting one-tenth of the excess after December, 1835, one-tenth 
after December, 1837, one-tenth after December, 1839, one-half 
the remaining excess in December, 1841, and the remainder in 
December, 1842. 

In 1842 the Whig tariff was adopted, establishing high pro- 
tective duties on most articles of domestic manufacture, making 
an average rate on dutiable goods of 33.47 per cent. This act 
continued in force until 1846, when it was repealed, and what is 
known as the Walker tariff, from the name of the Secretary of 
the Treasury, was adopted. This act reduced the average rate 
on dutiable goods to 26.22 per cent. Eeductions on most of the 
articles in the tariff schedule of 1846 were made in 1857, lower- 
ing the average rate to 20.12 per cent. ; but on many articles the 
tariff of 1846 remained in force till 1861, when the Morrill tariff 
was adopted. This was a highly-protective tariff, and many 
rates were subsequently reduced. Since 1861 rates have been 
reduced, but there has been no change of policy. The present 
schedule is made up largely of specific duties, but the average 
rate at the present time is equivalent to 47.08 per cent, ad 
valorem. 

During the period from 1810 to 1815 many mills and furnaces 
were built ; but after the reduction of the tariff in 1816, the 
manufacturing industry being exposed to a degree of foreign 
competition it was unable to withstand, many proprietors were 
ruined, and large numbers of workers were turned out of 
employment. From 1828 to 1831 manufacturing industries 



248 THE DISTRIBUTION OF WEALTH. 

revived, mills were again erected, and there was a rapid growth 
of manufacturing industry ; but in 1833 the protective policy- 
was again abandoned ; the ruin of manufacturers ensued, agri- 
culture was extended, the agricultural product grew in excess 
of the demand, and the fate that overtook the manufacturer 
pursued the farmer. 

From 1842 to 1847 there was again a revival of manufact- 
uring industries; mills and furnaces were again constructed 
and again closed, when the protective policy was abandoned for 
the Walker tariff of 1846. 

From 1850 to 1852 the price of flour fell below the lowest 
prices that had ever been known before. From that time 
forward to 1861 few mills were erected, the old having depre- 
ciated in value below the cost of production. 

The effect of the low tariff of 1846 upon the general prosperity 
of the country was greatly modified by certain occurrences, 
among which was the discovery of gold in California and an 
inflation of values resulting from an increase of metallic cur- 
rency.* The great famine in Ireland, following soon after the 
enactment of the Walker law in 1846, and short crops in Europe 
in the ensuing years, created a greatly-increased demand for 
the product of agriculture. Industrial disturbances in Europe, 
occasioned by the revolution of 1848, and followed by the 
Crimean war, which began in 1853 and ended in 1856, which, 
while it increased consumption, greatly reduced the agricultural 
product, and shut off the grain-fields of Eussia from competition 
with the United States, stimulated the foreign demand for 
agricultural products and greatly relieved the depression natu- 
rally occasioned by the adoption of a low tariff policy; yet, not- 
withstanding these favorable conditions, there followed in 1857 a 
disastrous panic, involving all interests alike, suspending in- 
dustrial progress and producing general stagnation in business. 
Henry C. Carey, in his book on political economy, written in 1858, 
says, " The history of industry in no civilized country of the world 
presents such a scene of ruin as is found in the manufact- 



* The gold product of the United States during the period from 1847 to 
1860 was over $600,000,000. The circulation, which in 1850 was |265,000,000, 
in 1860 had increased to $487,000,000. 



THE DISTRIBUTION OF WEALTH. 249 

uring, mining, and railroad history of the United States. The 
farmers," says he, " are poor, and with each successive year the 
land is being more rapidly exhausted, and the country exhibits 
many other evidences of declining civilization." 

The repeal of the high-tariff schedule of 1842 was in great 
measure owing to the efforts of Eobert J. Walker, a Mississip- 
pian, who had been made Secretary of the Treasury under Presi- 
dent Polk. He claimed that manufacturers were deriving 
exorbitant profits from the protected industries, to the detri- 
ment of the agriculturist and mechanic. He was no doubt 
right in the claim that the profits of manufacturing were rela- 
tively large. Wealth has always accumulated in manufactur- 
ing centres. Skilled industry is always the most profitable ; 
skilled labor, reinforced by machinery, is the most productive. 
This fact constitutes the principal reason for converting crude 
labor into skilled labor, and employing it in manufacturing in- 
dustries in preference to buying manufactured products abroad 
and paying for them in the j^roducts of agriculture. 

Prior to the abolition of slavery, the South had no interests 
to be subserved by a protective policy. Her labor was not 
susceptible of conversion into skilled labor ; the market for her 
principal product was in London and Liverpool rather than in 
the cities of the American Union ; and it was to her interest to 
pursue a policy that would insure the lowest possible prices for 
food and clothing, neither of which constituted a leading 
product in the cotton-producing States. 

The same argument advanced by Walker in 1842 may be 
urged to-day. The relatively large increase of wealth among 
those engaged in manufacturing industries, while it does not 
constitute a sound reason for a modification of the protective 
policy, affords a most plausible pretext. If the industrial co- 
partnership is continued, it must be on the condition of a more 
equitable distribution of its advantages. Manufacturers, me- 
chanics, agriculturists, and miners constitute a single indus- 
trial entity. One class cannot exist without the others; and 
notwithstanding the diversity of interests of the several classes, 
they together constitute a system of interdependent parts, 
operating together both in production and distribution, and the 
prosperity of each depends upon the general prosperity of the 



250 THE DISTEIBUTIOX OF WEALTH. 

whole. The values of the products of one class are measured by 
the products of other classes, and are therefore relative, and not 
absolute. All are therefore alike interested in maintaining the 
common market to which all products must be contributed, and 
in which all values are measured. 

Says Mr. Hoyt, in his work on " Protection vs. Free Trade," — 
"Professors in colleges, the capitalists whose money is in- 
vested in banks, railroads, farms, and plantations, worked by 
tenants, go abroad. In London, Paris, and Berlin they purchase 
many articles of vertu, household decoration, and personal 
adornment, which we either cannot make at all, or make as 
cheap as the foreign artisan, and our travellers soon acquire an 
air of condescension towards Americans and American products ; 
they are fond of reckoning the cost in pence and pounds ster- 
ling. On their return they are landed at the custom-house, and 
the wealth they are bringing into the country in the shape of 
gloves, corsets, and the like, is intercepted long enough to enable 
the government to collect the share of taxes which they ought 
to contribute to the common revenue. The professors and the 
capitalists are hurt as to their feelings, and proceed at once to 
join a free-trade club." 

The wages paid in America for labor and the salary paid 
for professional service are gauged by the American standard. 
When measured in money, and generally when measured in 
any product of labor, the compensation of labor here is higher 
than that made for like services in Europe, because of Ameri- 
can institutions, because of protection to American industries, 
because our market is preserved to our own people. He, how- 
ever, who enjoys the benefit of the American market, has dis- 
charged only a part of his obligation when he has contributed 
the product of his own labor to that market; or rather, it 
maj^ be said, when he has sold his labor in that market, and en- 
joyed its special advantages, he has entered into an obligation 
to do his part in maintaining that market. If he sells, he is 
under obligation to buy. For his own labor he is entitled to an 
equivalent amount of the products of other labor, measured by 
the same standard. He takes upon himself the obligation of 
a citizen to promote the common interests of the industrial co- 
partnership into which he enters. He is not entitled to enjoy 



THE DISTRIBUTION OF WEALTH. 251 

a distributive share without complying with conditions imposed 
on his copartners. 

BESSEMER STEEL. 

The steel industry in the United States has been made the 
subject of frequent discussion by both the advocates and 
opponents of protection. The friends of protection point to the 
phenomenal growth of this industry under the protection of high 
duties, while the advocates of a tariff for revenue only point to 
the phenomenal profits which manufacturers of steel rails have 
derived from capital invested in a protected industry. 

Statistics of the Bessemer Steel and Open-Hearth Steel- Works 
in the United States, from census of 1880, covering the year 
ending May 30, 1880, show the following : 

Total number of establisliments 36 

" amount of capital invested (real and personal) |20,975,999 

Average capital to eacli establishment $582,77? 

' ' number of hands employed (of these there were females , 

1 ; males below 16, 621) 10,835 

" wages of skilled workmen per day |3.21 

'< " " unskilled " " " |1.25 

Total wages paid during the year |4, 930, 349 

Average yearly wages of skilled workmen $751.14 

" " " " common " 1292.50 

Number of months in active operation 9 

The number of skilled workmen would therefore be 3,840 

" " " unskilled " " " " 6,995 

Total value of all materials used $36,826,928 

" number of tons of product 983,039 

" value of all products $55,805,210 

Average value of product per ton $56.76 

Net value of all products, deducting materials and wages . . . $14,047,933 

Per cent, of capital represented by net value of product .... 66.9 

Number of tons of Bessemer steel rails embraced in this product 741,475 

Value of steel rails included $37,408,625 

Value per ton of steel rails $50.40 

Cost of labor and material entering into a ton of steel ..... $42.47 

Value of pig-iron used in total product $22,521,098 

Other materials used and embraced in the foregoing total 
were as follows : 



252 THE DISTEIBUTION OF WEALTH. 

Iron - ore, $59,997 ; spiegeleisen and ferro-manganese, 
$2,868,519; old steel rails, 12,435,463; Bessemer ingots and 
blooms, $2,300,988 ; open-hearth ingots and blooms, $1,129,662 ; 
scrap-iron, $295,074 ; scrap-steel, $2,257,053 ; hammered iron-ore 
bloom, $889,136 ; pig- and scrap-bloom, $10,500 ; anthracite coal, 
$348,752; bituminous coal, $1,087,731; coke, $471,618 ; char- 
coal, $3461 ; other materials, $138,076. 

It will be observed that all these materials represent labor 
performed. But, starting with the ore or crude material, capi- 
tal derives a profit at each stage of progress towards the com- 
pleted product. Profits, however, are comparatively moderate 
until the last stage is reached, — the conversion of pig-iron into 
steel. Here the amount set apart to the credit of capital is 66.9 
per cent, on the capital invested. What proportion of this large 
margin is required to maintain capital — that is, to repair and re- 
place worn-out machinery, buildings, and fixtures — we have no 
means of ascertaiuing. But if we allow fifteen per cent, for 
maintenance of capital, and 1.9 per cent, for taxes, there re- 
mains fifty per cent, to the credit of profits or interest on 
capital. The pig-iron used in making steel is made in blast- 
furnaces, of which accurate statistics are given. As pig-iron 
represents more than half the cost of materials entering into the 
steel product of which the statistics have been given, the 
statistics of the production of pig-iron and spiegeleisen are here 
presented : 

STATISTICS OF BLAST-FURNACES, 1880 (pIG-IRON). 

Number of establishments 490 

Total amount of capital (real and personal) 1105,151,176 

Average capital to each establishment $214,594 

Total hands employed . 41,875 

Males above sixteen years 40,683 

" below " " 1,183 

Females 9 

Total wages paid $12,680,703 

Average day's labor, twelve hours. 

" " wages, skilled mechanic $1.90 

" " " ordinary laborer $1.17 

" time of work during the year (months) 8 

*' annual wages to each worker . $304.27 

" " earnings of skilled laborers $395.20 



THE DISTRIBUTION OF WEALTH. 253 

Average annual earnings of common laborers $244.06 

Total value of materials used $58,619,742 

" " " product " $89,315,569 

Net " " '' (deduct materials and wages) $18,015,124 

Per cent, which net product is of capital 17.13 

Value per ton of product $23,62 

Cost of labor and material per ton $18.87 

It will be observed that in the steel industry the average em- 
ployment was for nine months, and in the blast-furnace indus- 
try the average time was eight months of the year, showing a 
capacity for production, without increase of capital or number 
of workers, in the former industry, of one-fourth, and in the 
latter industry of one-third, in excess of the demand for the 
products of those industries. 

The number of establishments engaged in making pig-iron is 
four hundred and ninety ; and the number of establishments 
engaged in making Bessemer and open-hearth" steel is only 
thirty-six. The average capital to each establishment in the 
former industry is $214,594, and in the steel industry the 
average is $582,777. 

Had all the blast-furnaces been operated with full force 
throughout the year, the excess of product would have destroyed 
values; no profit could have been realized, but great loss of 
capital must have ensued. The same is true of the steel 
industry. 

Where the number of establishments is small, and particularly 
in industries where the sale of the product is generally con- 
tracted before the product is manufactured, there is little diffi- 
culty in avoiding destructive competition. And where the 
number of establishments is so small, as in the steel industry, 
and the average capital employed so great, combinations, either 
tacit or express, to advance prices beyond a reasonable profit, 
are easily effected and adhered to. 

Since 1880 the price of steel rails has fallen below what was 
then the cost of material. 

In 1860 the United States produced but 821,223 tons of pig- 
iron. In 1886 the product amounted to 6,365,328 tons. The 
number of tons of steel rails in 1880 was 741,475, and in 1886, 
1,763,667. 



254 THE DISTEIBUTION OF WEALTH. 

The reduction in the price of steel is the result of improved 
methods and machinery and of increased competition. This 
industry, since 1861, has all the while been in a course of 
development. In the end it must reach the status of other 
industries, and yield its excessive profits to the effect of competi- 
tion. And if, from the necessity for the concentration of large 
amounts of capital, the number of establishments shall be lim- 
ited within the range of effective combination to maintain un- 
reasonable prices, there should be no hesitation in applying the 
remedy of foreign competition, by making a special reduction 
in the rate of duty on steel. 

Iron and steel cannot be produced as cheaply in this country 
as in Europe, for two reasons. The first is, that wages in this 
country are comparatively much higher ; and the second reason 
is, that in Europe the materials are found in much closer prox- 
imity than in the United States. 

In 1881 the price for puddling was fixed for one year, by 
agreement between employers and employes, at a minimum of 
$5.50 per ton, the price to be advanced when bar-iron advanced 
beyond two and one-half cents per pound. In 1880 the mini- 
mum price was fixed at $4.00 per ton, to be advanced to $4.50 
per ton when bar-iron advanced to two and one-half cents per 
pound. While in North England, the principal seat of iron 
industry in that country, the price fixed for the same work was 
$1.75 per ton. 

In the United States materials are sometimes transported as 
far as one thousand miles. Connellsville coke is taken six hun- 
dred miles to the blast-furnaces of Chicago, and seven hundred 
and fifty miles to those of St. Louis. The average distance over 
which iron-ore is transported in the United States is about four 
hundred miles, and the average distance of the transportation 
of fuel used for smelting about two hundred miles, while in 
Great Britain the materials are seldom required to be trans- 
ported over one hundred miles. A considerable part, therefore, 
of the cost of production in this country is the cost of trans- 
portation. 

The following table shows the fluctuations in price of steel 
rails in England and in the United States during the period 
from 1871 to 1882, inclusive : 



THE DISTRIBUTION OF WEALTH. 255 

v<»jir Price in Price in the ri;m.««^«^ 

^^^^' England. United States. Difference. 

1871 154.99 191.18 |36.19 

1872 67.64 98.43 30.79 

1873 80.05 103.91 23.06 

1874 68.75 85.76 17.01 

1875 44.28 69.75 14.97 

1876 32.12 44.97 12.75 

1877 29.20 42.08 12.88 

1878 25.55 42.00 16.45 

1879 26.88 48.25 21.37 

1880 34.36 67.50 33.14 

1881 31.53 60.00 28.47 

1882 31.10 57.00 25.90 

The duty, during that time, was twenty-five dollars per ton. 

There will be observed a corresponding fluctuation in English 
and American prices, the price being determined by the Ameri- 
can market, and not by a fixed cost of production in England. 
Had the duty been less, English prices would have been higher 
and American prices lower. 

The steel used in the United States, in the form of steel rails, 
during the period named, cost the people of the United States, 
at the prices paid, $159,312,216 more than the cost would have 
amounted to at the English prices. And therefore Mr. John G-. 
Carlisle, in a recent number of the Forum, says that this sum 
was received by the riianufacturers for their private use. In making 
this statement Mr. Carlisle ignores, first, the cost of transporta- 
tion of all this steel from England to points in America as con- 
venient for distribution as the several locations of the American 
steel-works; second, the far greater cost of materials in the 
United States ; and, third, the far greater cost of labor in this 
country ; the wages paid to skilled workmen in America being 
about twice as much as the wages paid in England. So, while 
it is true that American manufacturers made large profits, the 
amount is not expressed in the sum stated. The cost of labor 
and materials alone entering into the manufacture of a ton of 
steel rails in this country, for the year ending May 30, 1880, was 
$42.47 ; while in England, for the year 1879, the price of steel 
rails per ton was but $26.88. In 1880 the English price ad- 
vanced to $34.36; the American price having advanced from 
$48.25 to $67.50. As the price of the product advances, the 



256; THE DISTKIBUTION OF WEALTH. 

cost of material and the price of labor advances, the manufact- 
urer, however, getting the larger share of the increase in value. 

If, instead of stimulating the manufacture of iron and steel 
in this country by means of high duties, we had been compelled 
to import our iron and steel from England, where we would 
have purchased it, not at the prices shown above as the prices 
that did prevail in England, but at that advanced price which 
would have resulted to the English manufacturer from the 
demand in America, the effect of that demand, as it increased 
or diminished, is fully illustrated in the table above. When the 
demand was reduced, as compared with the capacity to produce, 
which was all the time increasing, prices went down ; when the 
demand increased, prices advanced. In 1877 the number of 
tons made in the United States was 432,169, and the price per 
ton was $42.08. In 1880 the product was 968,075 tons, and the 
price was $67.50 per ton ; in 1881 the product had increased to 
1,355,519 tons, and the price was $60.00 per ton. In 1882 the 
increase was but small, the product being 1,460,920 tons, and the 
price fell to $57.00 per ton. Since then prices have been going 
down. The capacity to produce has increased, and the pressure 
of the demand is no longer effective to maintain the high prices 
that formerly prevailed. The price in 1887 fell to $27.50 per 
ton, and is now no higher than in England. 

Who paid for these rails ? The railway companies, in the 
first instance. And from the railway companies the cost is 
gradually distributed, through freight and passenger traffic 
charges, among the whole body of the people. 

The statement of Mr. Carlisle, that the entire cost of trans- 
portation is deducted from the price of the agricultural product, 
is inconsistent with the theory maintained by the free-trade 
school of political economists in this country, that the consumer 
pays the entire amount of the duty on foreign imports. Charges 
for transportation, as well as the amount of duty levied on im- 
ported goods, are divided between producer and consumer. No 
principle of economic science is better established. 

Suppose that, instead of manufacturing our own steel rails, 
we had pursued the policy of importing largely from England, 
how would the account now stand ? 

First, as the demand pressed upon the English market, prices 



THE DISTRIBUTION OF WEAIrTH. 257 

would have advanced. Second, as our agricultural export re- 
quired to pay for the increased imports grew in volume, it must 
have fallen in price. The consumption of food-products by the 
English people could have increased only within narrow limits, 
and only as prices fell, or as wages in that country advanced. 
Third, a considerable portion of those engaged in the iron and 
steel industries would have been compelled to seek employment 
elsewhere, as soon as the demand for the product of their labor 
fell off, the market being supplied by the English product. The 
persons of the personal-service class, mechanics and others sup- 
ported by those released from the manufacturing industry, would 
algo have been compelled to look elsewhere. The effect would 
have been an increase in the number of agriculturists, — a class 
already relatively too large. 

The American price of steel rails per ton during the census 
year was $50.40. The total value of products in the steel 
industry (deducting materials) was $18,978,282; the value 
created by each worker being $1751.50, the amount of capital 
employed to each worker being $1860. In agriculture, the 
average capital to each worker was not much less ; the average 
product was three hundred dollars. If we assume the English 
price of steel rails, with cost of transportation added, to have 
been thirty dollars per ton, which is about the true amount, the 
labor of one man in agriculture, assuming that the product in 
England would sell for enough more than the farm-price here to 
pay for transportation, commissions, etc., would purchase ten 
tons delivered in New York ; while one man in this country 
can produce with his labor 34.7 tons equal in quality to those 
of English manufacture. But, allowing for greater waste of 
capital in the iron and steel industry, we may say that the 
labor of one man in the iron and steel industry, measured by 
English prices, is equal in value to the labor of two and one- 
half men in agriculture. Can we then afford to trade two and 
one-half days of American labor for one day of English labor ? 

This basis is on the estimate of values as they stood. But, had 
we largely increased our importations, and paid for the increase 
with our agricultural product, the difference would have been 
much greater, for we would have paid more for rails and got 
less for our agricultural export, while agricultural prices in 

17 



258 THE DISTRIBUTION OF WEALTH. 

general would have fallen. We paid still a higher price to the 
American manufacturer, measuring prices in money, but a less 
price as measured by labor, and the increase of wealth resulting 
from the employment of our own skilled labor remains at home. 
The distribution of the increased wealth is in favor of capital, it 
is true ; but it is a question of distribution and not of production. 
The remedy will not be found in abandoning our protective 
policy and transferring the profits to England, but in a more 
equitable distribution among our own people. 

In the rapid development of a great industry like that of the 
production of iron and steel in the United States, these inequali- 
ties of distribution necessarily arise. The large profits are m 
part attributable to the employment of patented processes and 
machinery, the same cause which so long unduly enhanced the 
profits of the manufacture of agricultural machinery. Enormous 
profits have likewise been made in railway building, in land 
speculation, in the mining of precious metals, and also in trade. 
We ought to be able to find a remedy, without the assistance of 
England. The lion would no doubt be pleased to drive the 
wolves away, but how shall the lambs be protected from the 
lion ? 

In G-reat Britain, notwithstanding low prices of steel and of 
other products of manufacture, the agricultural laborer is not 
only absolutely, but relatively, far poorer and more meanly paid 
than in the United States. 

In England, as well as in the United States, the capitalist 
manages to secure large profits. If prices are low, he pushes 
down the price of labor, but always preserves a good margin for 
himself. 

The great American people can never promote their own 
prosperity by buying the products of skilled labor in England, 
and then, in payment, shipping wheat and cattle and corn 
across the ocean to the markets of Liverpool and London, 
already crowded with the products of cheap labor from South 
America, Australia, Eussia, Africa, and India. Western Europe 
is the only country importing wheat for home consumption, 
and Western Europe produces three-fourths of the wheat 
required for home consumption. India produces from ten to 
fifteen per cent, in excess of the home demand, and South 



THE DISTRIBUTION OF WEALTH. 259 

America, Australia, Eussia, and Africa all grow wheat for export. 
In 1889 the area of the wheat crop in the United States was 
about ten million acres in excess of what is required for home 
consumption. The prices of late in Liverpool have been the 
lowest that have prevailed during the century. South America 
possesses an unlimited area of fertile lands not yet brought 
under cultivation, and an abundance of cheap labor. By means 
of the construction of railways, the cultivation of wheat for 
export, on the fertile lands of India, has been greatly increased. 
Owing to the habits of the laboring-people of India, who, like 
the Chinese, are content to subsist on a few cents per day, the 
cost of production in that country does not exceed forty cents 
per bushel, and Indian wheat can be put on the London market 
at sixty cents per bushel. There is no foreign demand for 
our corn and oats, and our export trade in meats is subject to 
competition with the cheap products of South America and 
Australia. 

The European market for the products of American agricul- 
ture, unless the quantity of our export be relatively reduced for 
at least fifty years to come, must continue, as a rule, to be a 
market of low prices. The industrial development of South 
America, India, and Africa will proceed but slowly. They will 
continue to be fields of crude, cheap labor, devoted chiefly to 
agriculture, and they will fill the markets of Europe with their 
surplus. 

European agriculture has suffered from the same ruinous 
competition that has destroyed the profits of farming in the 
United States. The lands of Germany, France, and G-reat 
Britain are covered with mortgages, and the distress of the 
agricultural classes in those countries has been a subject of 
grave concern. 

According to Mulhall, real estate in the United Kingdom in 
1883 was mortgaged to forty-one per cent, of its value, the 
mortgages amounting to eight billion three hundred million 
dollars ; in France to seventeen per cent, of its value ; in Ger- 
many to forty-nine per cent, of its value ; and in Italy to thirty- 
seven per cent, of its value. According to Lord Eeay, the 
landed properties in England in 1883 were mortgaged to fifty- 
eight per cent, of their value. In P|*ussia the land mortgages in 



260 



THE DISTRIBUTION OF WEALTH. 



1869 were fifty-one per cent, of the value of the lands, and the 
house property in Berlin was mortgaged to sixty-eight per cent. 
of its value. In Egypt the mortgages registered from 1878 to 
1883 amounted to thirty-two million dollars. 

Later statistics show a large increase, and the mortgages of 
France are now estimated at forty per cent, of the value of 
the lands. The amount is about four billion dollars. The 
mortgages of Ireland amount to fifty per cent, of the value of 
lands, and about two-thirds of the real estate of Eussia, Italy, 
Spain, and Switzerland is mortgaged. Universal competition, 
with its resultant fluctuations in values, has opened the way to 
an aggregation of wealth in all the countries of Europe that 
absorbs the profits of agriculture and weighs heavily upon the 
middle classes. 

All countries trading together, or whose labor and capital 
compete in a common market, are exposed to financial convul- 
sions and industrial depressions caused by events and conditions 
affecting any one or more of the countries so united. Industrial 
depressions in the United States have been quite contempora- 
neous with like depressions in Europe. The following table, 
which I quote from the Eeport of the Commissioner of Labor 
of 1886, shows the dates of industrial depressions and countries 
affected. 

TEARS OF DEPRESSIONS. 



Countries. 


Years. 


United States 
Great Britain 
France .... 
Belgium . . . 


1803* 
1804 


1810 
1810 


1814 
1815 
1813 


1818 
1818 
1818 


1826 
1826 
1826 


1830 
1830 


1837 
1837 
1837 
1837 
1837 


1847 
1847 
1847 
1848 
1847 


1867 
1866 
1866 
1864 


1873 
1873 
1873 
1873 
1873 


1882 
1883 
1882 
1882 
1882 








. 























To the extent that any of the leading industries of the United 
States are made dependent upon foreign markets, to that extent 
do our people impose upon themselves the risk of industrial 
depressions arising from conditions prevailing in foreign coun- 
tries which they are unable to control or prevent. Unrestricted 
trade means an industrial copartnership with the nations of 
Europe, by virtue of which all the industrial evils established in 
those countries shall become factors in determining the fate 



THE DISTEIBUTION OF WEALTH. . 261 

of our own people. Industrial independence, so far as natural 
conditions will admit, should be the aim of every people. 

A FREE-TRADE ARGUMENT. 

Mr. Edward Atkinson, in a recent article, which he entitles 
" Common Sense and the Tariff Question," in the Popular Science 
Monthly (September, 1890), in advocacy of the principle of free 
trade, says, " On the plea that this branch of industry should be 
sustained, the consumers of iron and steel in this country have 
paid a sum in excess of the price paid by the consumers who 
have been supplied by Great Britain and Germany, ranging 
from fifty millions to eighty millions of dollars a year for the 
last ten years. The excess of price has not been paid over to the 
workmen by the owners of the mines and works ; it has been be- 
stowed upon private individuals to aid private enterprises. One 
has only to examine the average wages of the workmen in iron- 
mines and works of this country to be convinced that they are 
much less than the wages of those who are engaged in the con- 
version of crude iron and steel into machinery, tools, beams, 
bars, and other forms of use." Mr. Atkinson seeks to show 
that, by reason of the tariff, manufacturers of iron enjoy ex- 
cessive profits. 

In 1884, Mr. Atkinson published his book on " The Distribu. 
tion of Products," the leading purpose of which appears to be to 
demonstrate that, in the division of product between capital and 
labor, labor receives its full share. Speaking of the iron indus- 
try, and particularly of data gathered from the accounts of an 
Eastern furnace, employed to illustrate the industry in general, 
he says, " If we consider the period from 1860 to 1880 histori- 
cally, it has been one of singular progress in improvements for 
converting ores into iron, both in the construction of furnaces 
and in the saving of labor. To whom the benefits of these in- 
ventions and improvements have inured the table shows. 

•' 1st. The margin between the selling price of iron and the 
cost of materials has decreased ^^-^-^ per cent. The share of 
capital has been reduced both absolutely and relatively. 

" 2d. Labor has been rendered less arduous, while the wages 
of the laborer have been increased 37^^ per cent. The share 
of the laborer has been increased both absolutely and relatively. 



262 . THE i:)ISTRIBUTION OF WEALTH. 

"3d. The price of iron to the consumer has been reduced 
Sl^^ per cent." 

Mr. Atkinson follows these statements with a graphic table 
demonstrating and illustrating the propositions announced with 
a full array of figures, and says, " This table might well be 
named ' The indicator of progress from poverty of the work- 
man, and progress towards poverty of the capitalist.' " 

Taking the conditions of 1860 to 1864, inclusive, and compar- 
ing these conditions with those of 1875 to 1879, inclusive, Mr. 
Atkinson illustrates, by means of a second graphic table, the 
changes which have occurred in a blast-furnace used for the 
conversion of iron-ores and coal into pig-iron. The changes 
exhibited are as follows : 

" Product per head increased from 776 tons to 1219 tons. 

" Total product increased from 58,959 tons to 86,546 tons. 

" Wages increased from $353 per year, in a depreciating cur- 
rency, to $486 per year in an aj)preciating currency. 

" Gross value of product increased from $1,627,268 to 
$1,651,298. 

" Number of hands employed decreased from 76 to 71. 

"Price of iron decreased from $27.95 to $19.18 per ton. 

" Margin between the value of the product and the cost of 
materials and labor, from which margin taxes, general expenses, 
and profits are to be derived, depressed from %9.55 per ton to $1.09 
per ton.'' 

He then says, " It will be apparent that, while the profits of 
capital may have been much more than ten per cent, in the first 
period, and must have been much less in the second ; yet such 
facts can seldom be correctly ascertained, and, if given, would 
not be as useful as to assume a certain uniform rate of profit. 
It is an absolute rule that if profits rise above a certain rate in any 
art which is open to free competition^ capital will be immediately ap- 
plied thereto in ample measure so as to bring them down to an aver- 
age at any given time. If an excess of profit is gained for any 
considerable period, an excess of capital will be invested, and 
presently what is called an over-production will occur." 

The italics in the foregoing quotations are my own. 

This is a clear case of stare decisis. Mr. Atkinson first writes 
a book, the product of painstaking investigation, in which he 



THE DISTRIBUTION OF WEALTH. 263 

demonstrates to his satisfaction the equitable division of product 
between labor and capital, and that " it is an absolute rule that 
if profits rise above a certain rate in any art which is open to 
free competition, capital will be immediately applied thereto in 
ample measure so as to bring them down to an average at 
any given time ;" and the industry he. cites, and from which he 
obtains his statistics for his final and conclusive demonstration 
of this ^proposition, is the iron industry. 

He now contributes to a leading magazine an article showing 
careful preparation, and accompanied by the usual object-lesson 
in the shape of a graphic illustration, the purpose of which is 
to demonstrate the advantages of free trade, in which he 
assumes, with the confidence of one accustomed to speak with 
authority, that the truth does not accord with the statistics or 
the deductions which served his purpose in a discussion of the 
relations between capital and labor, but that what he then 
announced as an absolute rule is no rule at all. 

The readiness with which Mr. Atkinson abandons his former 
position in order to place himself en rapport with the spirit of 
free-trade logic indicates no common aptitude for the adjustment 
of his views to meet the requirements of the argument in hand. 

In other chapters of this book I have endeavored to show 
that, in the division of the product between labor and capital, 
capital obtains an undue share. I now desire to examine the 
statement to which Mr. Atkinson lends his later endorsement 
in the article above mentioned, in which he abandons the 
doctrine which he has hitherto maintained. 

In one sense it is true that " the consumers of iron and steel 
in this country have paid a sum in excess of the price paid by 
the consumers who have been supplied by Great Britain and 
Germany." Whether that sum reached the figures named by 
Mr. Atkinson, from fifty million to eighty million dollars a year, 
it is not important to determine. The purpose of the statement 
is, I presume, to convey the idea that by reason of the tariff the 
iron and steel consumed by American consumers during the last 
ten years has cost them from five hundred million to eight 
hundred million dollars more than it would have cost had there 
been no duty. 

If Mr. Atkinson's figures correctly measure the difference in 



264 THE DISTRIBUTION OF WEALTH. 

the cost of iron and steel consumed at American and at English 
prices during the ten years, and if we assume that, had there 
been no duty and we had imported largely, as we would have 
done, no advance would have been made in European prices ; 
that, contrary to all experiences, an increased demand for the 
foreign product would have had no effect in raising prices ; and 
if we assume further that the export of agricultural products 
could have been increased in amount sufficient to have paid for 
the increase of importations without reducing the price in the 
foreign market of the bread-stuffs, meat, etc., exported, then 
Mr. Atkinson's statement, in the sense in which he employs it 
in his argument, would be apparently true; but still, in fact, 
untrue, for the reason, as I have already shown, that it takes 
at least three days' work in agriculture, at the prices which 
prevailed, to purchase the product of two days' work in man- 
ufacturing iron, measured by European prices and cost of 
transportation. It is altogether a question of the exchange of 
labor. 

It is true, as Mr. Atkinson and others contend, that many 
leading manufacturing industries no longer require the support 
of a high tariff on the theory of encouraging infant industries. 
Intelligent advocates of a high protective duty do not rest upon 
any such claim. Many of our manufacturing industries, with 
such reduction in the price of labor as free trade would bring, 
are prepared to compete in foreign markets, sell their goods, 
and force in return the importation of the products of foreign 
agriculture, or of foreign manufacture, to compete with and 
cripple other weaker industries, to the advantage of many 
capitalists engaged in manufacture and others engaged in trade ; 
but such foreign trade would be no advantage, but an injury to 
the American people as a whole. What concerns us now is not 
an extension of the field for the exploitation of capital, but a 
better adjustment of industrial forces and a more equitable dis- 
tribution. 

The average wages in the iron and steel industries of the 
United States during the census year were $2,59 per day for 
skilled labor and $1.24 for unskilled labor. The average annual 
wages of both skilled and unskilled labor in the industries 
referred to by Mr. Atkinson were as follows : 



THE DISTRIBUTION OF WEALTH. 265 

Industry. Wages. 

Anthracite coal mining $321.00 

Bituminous " " 326.00 

Iron-ore mining 301.00 

Coke (manufacture of) 381.50 

Iron rolling-mills 424.35 

Bessemer and Open-Hearth Steel "Works 455.00 

Blast-furnaces 310.25 

Cutlery and edged tools 472.70 

Iron nails and spikes 431.30 

Iron-works, architectural 406.40 

Iron forgings 414.00 

Steam-fittings 378.80 

Tools 472.60 

The low average annual wages as compared with daily wages 
results from the fact that these industries were, during part of 
the year, either wholly or partly suspended. 

Mr. Atkinson, in his statement that " the excess of price" 
(of the American over the English product) "has not been paid 
over to the workmen by the owners of the mines and works; 
it has been bestowed upon private individuals to aid private 
enterprises," wholly ignores not only his former deductions, but 
also the well-known fact that the wages of workmen in Amer- 
ican mines and in the American iron and steel industries are 
very much higher than the corresponding wages of English 
workmen. And while it is true that the whole amount of the 
excess of the money cost of American iron and steel has not 
been paid out in wages, about two-thirds of it has been paid out 
in wages to working-men directly and indirectly employed in 
these industries. The profits of capital, not only in these, but 
in all American industries, and on money loaned or invested in 
trade, have been greater than the profits of capital in England. 
The profits of capital in new and rapidly-growing countries are 
always greater than in old countries whose industries are 
developed and whose wealth has accumulated near to its ap- 
proximate limit. 

It is true, as Mr. Atkinson says, that the average wages of 
those engaged in converting crude iron into machinery, tools, 
and so on are higher than the wages of those engaged in mining 
and the manufacture of pig-metal, for the reason that the wages 



266 THE DISTRIBUTION OF WEALTH. 

of skilled labor are higher than the wages of unskilled labor in 
this and in all other countries, and this fact bears no relation to 
the question of protection or free trade. 

AN INDUSTRIAL BUREAU. 

Manufacturing industries are among the most potent factors 
of civiHzation. They develop in the highest degree mechanical 
and industrial skill; they stimulate invention and discovery, 
excite mental activity, widen the scope of human energy, and 
bring into the fullest play the powers of the educated mind. 
They at the same time furnish to agriculture the implements 
of an improved husbandry, and make a market for the increased 
product of the farm; they arouse the people from the dull 
lethargy of a plodding, uneventful life, create new opportunities, 
and open up new avenues of wealth. 

Combining the productiveness of skilled labor, aided by every 
ingenious mechanical device that invention can supply, with the 
powers of machinery operated by electricity and steam, they 
multiply the capacity of labor from ten- to a hundredfold ; and, 
as production is increased, the wages of the laborer, which are 
the measure of his share of the product, are increased in like 
ratio from a few cents a day, as in India and China, where pro- 
duction is limited to handicraft, to the highest wages in the 
civilized world, which are paid in the United States, where 
improved implements and machinery are employed in agricult- 
ure and in all departments of industry. 

Kot only have manufacturing industries increased production 
and advanced wages, but, at the same time, they have extended 
the limitations of wealth. The wealth of a purely agricultural 
people is measured by their farms, their cattle, horses, and im- 
plements of husbandry, a temporary supply of perishable prod- 
ucts, and the property employed in transportation and trade 
adequate to the distribution of the annual product. Beyond 
these subjects of wealth there is no field for investment, no 
room for growth. But a nation of diversified industries, in 
addition to these, has its mines, its factories, its furnaces and 
mills, an accumulated product in the form of fabrics and the 
various manufactures of wool and iron, which, being more 
durable than potatoes and corn, and less expensive to keep than 



THE DISTRIBUTION OF WEALTH. 267 

cattle and hogs, give storage-room for wealth ; and, in addition 
to these, there are more railways and more of everything re- 
quii-ed in the pursuit of many industries and the distribution of 
the larger product. Hence it is that manufacturing countries 
grow rich, while agricultural countries remain poor. Hence it 
is that in manufacturing countries wages are high, while in 
agricultural countries wages are low. 

Wealth accumulated is a power that controls commerce, de- 
termines the conditions of trade, and commands perpetual trib- 
ute from every industry that competes in the market where it 
holds sway. 

A people who, like Africans exchanging ivory for cotton cloth, 
or Indians trading venison for beads, exchange, in a foreign 
market, the fruits of husbandry or the products of handiwork 
for the products of machinery, who trade the work of muscle 
for the work of iron and steam, build up a power beyond their 
reach to control ; while, at the same time, they divest themselves 
of the opportunity for acquiring and storing that wealth at 
home which is the source of a nation's strength and the measure 
of the prosperity, intelligence, and culture of a people. 

The relative wealth and prosperity of England and Ireland 
or India furnish the only illustration needed of the effect of a 
policy limiting the industry of a people to the pursuit of agri- 
culture and the productions of handicraft, and compelling them 
to purchase in a foreign market the products of manufacture 
made by skilled labor with machinery run by steam and con- 
trolled by capital. 

But, on the other hand, it will be said, with equal truth, that 
the contrast between the rich and the poor in England is a 
measure of the evils that spring from the centralization of 
wealth, and that the advantages which accrue from manufact- 
uring industries are not distributed among the people. Yet 
the English working-man is infinitely better off than the Irish 
peasant or the Indian ryot. Besides, evils at home, by means 
of intelligent concert among the working-people, and by wise 
legislation, may be modified and corrected ; but the wealth that 
is gathered in an unequal exchange of the products of crude for 
those of skilled labor, carried away and piled up in a foreign 
domain, will not return, unless in the form of credits or invest- 



268 THE DISTEIBUTION OF WEALTH. 

merits in revenue-bearing property to carry abroad the perj)etual 
tribute of labor to an alien people. 

In the United States not only will duties on foreign imports 
continue to be a principal source of national revenue, but the 
policy of so adjusting these duties as to foster the growth of 
those industries which it is to our interest as a people to en- 
courage, and, by preserving our own market for the products 
of our own labor in those industries which combine skill with 
the power of machinery, promote the conversion of crude into 
skilled labor, thereby increasing its productiveness and its value, 
will be maintained. Eates of duty, from time to time, will be 
readjusted to meet the requirements of the demand for public 
revenue and conform to changing industrial conditions. These 
adjustments can be effected only by statutes enacted by the 
national Congress, but framed by committees who are appointed, 
and who must complete their work, during the sessions in which 
bills reported by them are enacted into laws. 

Imported articles which are subjected to duty under our sys- 
tem of revenue are numerous and varied in character, and the 
rate of duty upon each article must be fixed, not only with 
reference to cost of production, but also with reference to rates 
of duty on related articles. Thus if the duty on wool is ten 
cents per pound, the duty on manufactured woollens, in the 
various forms of manufacture, must be so adjusted as to conform 
to the cost of wool to the American manufacturer, or else foreign 
fabrics will crowd the home product from the market. The 
same principle applies to the iron industry and all other in- 
dustries where imports are received, both in the form of raw 
material and in the various stages of manufacture up to the 
completed product. The cost of production, involving both the 
prices of labor and the profits of capital, is involved in every 
adjustment of the tariff schedule. A congressional committee 
can have neither the time nor the opportunity to secure and 
digest the information essential to the making of a schedule 
adapted to the requirements of the revenue and adjusted t© the 
policy of protecting, in equal degree, the various industries 
affected so as not to disturb them in their proper relations, and 
at the same time conforming to the true principles of taxation ; 
and being composed of individuals of whom some, at least, pos- 



THE DISTRIBUTION OF WEALTH. 269 

sess little qualification for the work of adjusting the details of a 
tariff schedule, and of politicians concerned for their own polit- 
ical future, such a committee is not always able to disregard 
considerations of personal interest which ought, so far as prac- 
ticable, to be removed from influence on legislation so directly 
affecting the industries of a nation. 

Not only is the information on which these committees and 
Congress are compelled to act necessarily incomj)lete and often 
erroneous, but the people are not advised concerning the indus- 
trial facts which are supposed to form the basis of tariff rates, 
and they are unable to judge of the acts of their representatives, 
or to hold them to account. 

Errors and omissions are liable to occur in tariff schedules, 
and unforeseen effects sometimes result from a want of knowl- 
edge of the industrial uses of articles of commerce, or from not 
fully comprehending the exact meaning of commercial terms, 
and from a lack of knowledge concerning industrial conditions. 

There is need, therefore, of a permanent industrial commis- 
sion which shall be charged with the duty of collecting and 
collating statistics necessary to exhibit fully and in detail the 
cost of production, the wages of labor and the profits of capital, 
and other facts the knowledge of which may be essential or 
useful in shaping legislation affecting industrial interests or 
social conditions. 

Such commission should have the power to examine witnesses 
and to require the production of books and papers, so as to ob- 
tain full disclosures concerning every industry and trade sharing 
the advantages of the American market and enjoying the pro- 
tecting care of the government. 

The advantages which secrecy often affords to capital as a 
cover for its operations in securing an undue share of the prod- 
ucts of industry are not advantages which rightly belong to 
any individual in the industrial copartnership of a common- 
wealth, and the enforced disclosure of the cost of production or 
the profits of trade is no invasion of any private right. 

Such commission would be able to ascertain and make clear 
many facts the knowledge of which is essential to sound legis- 
lation touching industrial relations or affecting economic condi- 
tions which determine the welfare and shape the progress of a 



270 THE DISTRIBUTION OF WEALTH. 

people. And the statistics required cannot be gathered by the 
agencies and methods now employed ; but a commission, prop- 
erly constituted and clothed with the necessary authority, would 
be able to obtain the information needed in shaping legislation, 
and which might also, independent of legislation, greatly aid in 
securing and preserving a well-balanced adjustment of the 
various industries, and, in a measure, eliminate speculation as a 
principal factor in the distribution of wealth, and lead to that 
steadiness of industrial growth which is the best guarantee of 
reasonable prices and sure but not exorbitant profits. 

The institution of such a commission would meet the active 
opposition of that class of persons who make free use of the 
word " paternalism" as a term fitly characterizing all legislation 
designed for the protection of the people from the industrial 
wrongs and commercial frauds which enable aggressive and not 
over-scrupulous individuals, in the name of "business," and 
without legal hinderance, to build fortunes for themselves at 
the expense of others. 

The word " paternalism" is the English antipodes of laisser faire, 
and those who are now opposing the progress of industrial legis- 
lation are the successors of those who in the past opposed, as an 
unwarrantable interference with the right of private contract, 
those salutary laws which effected the reform of the factory 
system in England, and whose theory was tersely epitomized in 
the phrase laisser faire. Their successors, laying less stress upon 
an aflSrmative declaration of a somewhat discredited doctrine of 
economic science, now employ the word "paternalism" to express 
their repugnance to the policy which has established itself in 
opposition to their views and against their vehement protest. 

But, whether we desire it or not, the evident drift of public 
opinion and the general trend of events is in the direction of 
the employment of legislative restraints as a protection against 
industrial wrongs ; and one of the most useful as well as least 
objectionable of legal remedies is the collection and publication, 
by competent authority, of social and industrial statistics which 
may serve as a basis for sound theories and a guide to safe 
action. 

Industrial reforms must be pursued along the line of social 
progress and worked out as a natural product of existing tenden- 



THE DISTEIBUTION OF WEALTH. 271 

cies. Legislation may aid the process of evolution, and, as one 
of its leading factors, in a great measure control results. And, 
since changes in industrial conditions are inevitable, and the ten- 
dency in the direction of radical legislation in some form is every- 
vp^here apparent, the establishment of an industrial bureau would 
be a wise and conservative measure, by means of which public 
opinion and the legislation which shall proceed from it may 
be moulded into conformity with sound principles of economic 
science. 

We have already a Commissioner of Agriculture and a Com- 
missioner of Labor. These two offices should be united in one 
department, so as to co-ordinate their work; and 'such depart- 
ment should be clothed with the power necessary to secure a 
complete collection of social, industrial, commercial, and agri- 
cultural statistics ; and its duties should be enlarged, so as to 
embrace the work of exhibiting the statistics so collected and 
deductions derived therefrom in convenient form to serve as a 
guide in framing or modifying measures affecting the revenue or 
directly touching social and industrial relations. The work of 
such a department would necessarily be so conducted as to be 
little affected by partisan bias, and the domain of science would 
be gradually extended over much of the territory now in dis- 
pute between contending political factions. The organization 
of a bureau of this character would lead the people in the direc- 
tion of scientific investigations and deductions, correct false 
theories based on defective information or erroneous suspicions, 
and moderate the intensity of that radical spirit which feeds on 
a priori reasoning in fields unexplored by science. 

FOREIGN IMMIGRATION. 

In 1880 the total foreign-born population of the United States 
was 6,679,943, and the number of native-born population of foreign 
parentage was 8,316,053, making a total population that was 
either foreign-born or of foreign parentage of nearly 15,000,000, 
or thirty per cent, of the total population. The per cent, of 
foreign-born population in several leading cities was as follows : 

Boston 31.8 Detroit 39.2 

Cincinnati 28 Milwaukee 39.8 

Chicago 40.5 New York 39.7 



272 THE DISTRIBUTION OF WEALTH. 

The per cent, of persons of foreign birth of the whole number 
of workers engaged in all occupations in fifty leading cities was 
forty-two and six-tenths ; of the number engaged in trade and 
transportation, thirty-four and three-tenths ; and of those en- 
gaged in manufacturing, mechanical, and miuing industries, 
forty-nine and three-tenths. 

Assuming that in the industries of these cities the general 
ratio of native-born persons of foreign parentage is maintained, 
the percentage of population that was either foreign-born or of 
foreign parentage would be as follows : 

Boston 71.58 

Cinciimati 62.8 

Chicago 90.8 

Detroit . 87.9 

Milwaukee " 89.3 

New York 89 

In all industries in fifty cities 95 

In trade and transportation in fifty cities 76.1 

In manufacturing, mechanical, and mining in fifty cities 110.6 

It will be observed that the percentage so obtained is impossi- 
ble as to "manufacturing, mechanical, and mining" iodustries, 
and too large as to the industries combined. We may therefore 
conclude that a larger percentage of the children of foreign 
than of native parents leave these cities ; also that the ratio of 
the number of persons of foreign birth to the number of the 
native-born of foreign parentage engaged in manufacturing and 
mining is greater than in other industries. 

Of those classified as of foreign parentage, there were a 
fraction over one-seventh, one of whose parents was native- 
born. 

Since 1880 the ratio of immigration has greatly increased, and 
the ratio of foreign population in 1890 will be still greater than 
that shown by the census of 1880. 

In the State of Massachusetts, in 1888, the number of alien 
males above the age of twenty-one years was 197,861, of whom 
99,131 were unnaturalized. The number of native-born males 
over twenty-one years of age was 343,886, including those who 
were native-born, but of foreign parentage. The number of 
foreign-born was 36.5 per cent, of the whole. 



THE DISTEIBUTION OF WEALTH. 273 

In 1880, when our foreign-born population was but thirteen 
per cent, of the whole population, nineteen per cent, of the con- 
victs in our penitentiaries and forty-three per cent, of the in- 
mates of work-houses and houses of correction were of foreign 
birth. 

That the importation of an alien population, many of whom 
are grossly ignorant and most of whom are extremely poor, 
injuriousjy affects our people, socially, morally, and economically, 
there can be no question. 

The lower portion of Manhattan Island, on which stands the 
City of New York, is a delta, formed of the detritus dropped at the 
mouth of the turbid stream of foreign immigration that is steadily 
pouring into this country through Castle G-arden. A large por- 
tion of these people, now crowding in upon us, are not only 
without any true conception of the dignity and the obligations 
of American citizenshi]), but they are ignorant and morally de- 
praved ; they are the stunted and misshapen products of ages 
of degrading servitude, and their deformed physiognomies make 
constant proclamation of mental and moral defects that have 
acquired the character and permanence of inheritable traits, 
which it will require generations in contact with more generous 
environments to eradicate. 

While it would not accord with the genius of our institutipns 
to deny admission to any European immigrant whose moral and 
educational attainments are such as to bring him into harmoni- 
ous and sympathetic accord with the spirit of American civiliza- 
tion, and fit him for the duties and responsibilities of a citizen 
of a free and progressive republic, we are under no moral obli- 
gation to degrade any American industry by admitting into our 
midst a horde of ignorant, non-progressive, morally degraded 
foreign competitors, to divide with the poorer and more defence- 
less of our own people the advantages of that generous market 
for labor, in the making of which the higher standard of living 
of American working-men has been the chief factor. We are 
not impelled by any sentiment of humanity or by any patriotic 
impulse to destroy the value of our free schools — fountains of 
learning and culture which are the resort of the children of the 
whole people — by making them places of infectious contact 
with social depravity, nor to permit the current of social life 

18 



274 THE DISTRIBUTION OF WEALTH. 

among the common people in this country to be converted into 
a lavatory, into which thousands of ignorant immigrants may 
plunge and cleanse themselves from the gross impurities that 
incrust the lower grades of human character in many sections 
of Europe. 

Foreign immigration has been considered only in its relation 
to the interests of capitalists looking to immediate pecuniary re- 
wards. Indiscriminate immigration has been invited and aided, 
in the interest of great railway corporations, in haste to enhance 
the value of the lands conveyed to them by a generous govern- 
ment as a bonus for the construction of railways ; the owners 
of mines, the proprietors of furnaces and factories, railway con- 
tractors, builders, and other employers of labor have encouraged 
and often directly aided the importation of foreign labor, in 
order that they might increase the margin of profit in the par- 
ticular enterprises in which they were at the time engaged, 
without regard to future results, or the moral and economic 
effect upon the nation at large. 

Foreign immigration has an economic bearing in relation to 
the distribution of wealth which is of concern to the whole 
people ; and it has also a moral bearing of equal concern to 
those whose vision is not bounded by the horizon of dollars and 
cents. Our national policy on this subject should be framed on 
a broader basis than that of subserviency to the interests of 
capital in its struggle to appropriate a still larger share of the 
product of labor. 



CHAPTEE IX. 

MONOPOLIES AND TRUSTS. 

Mr. Henry Gteorge portrays with great strength and clear- 
ness the condition of poverty and dependence of a numerous 
class of working-people, — a class that is constantly increasing, 
and whose condition every year grows more and more hopeless. 
Looking about for an explanation of this phenomenon, — for in 
a country like the United States, where wealth is abundant, and 
where the power of the people to produce greatly exceeds their 



THE DISTRIBUTION OP WEALTH. 275 

power to consume, such a state of affairs may well be regarded 
as a phenomenon, — he finds the explanation, as he believes, in 
the monopoly in the ownership of land. Finding here what is 
undoubtedly one of the chief sources of the evil which he so 
eloquently portrays, he permits himself to overlook other co- 
operating causes in his earnest pursuit of the one to which his 
attention is mainly directed, and which he so vigorously assails. 

Land is not the only subject of ownership the quantity of 
which is limited. Every other species of property is also lim- 
ited by economic conditions ; and the amount of the total wealth 
of a country is likewise limited. 

The limitation on land is a natural limitation on the quantity 
of the subject-matter. As to other classes of property, the lim- 
itation rests in economic conditions which determine the quan- 
tity that can be used. The limitation is a limitation on values, 
which, as effectually as any other, sets bounds to production. 
The amount of money (omitting all consideration of foreign 
commerce) which a country may have, while not as definitely, 
is as effectually prescribed by economic conditions as the quan- 
tity of land is fixed by the limitation of nature. The nominal 
amount of money may be increased ; but beyond the demands 
of trade, while the number of dollars or of pieces may be mul- 
tiplied, the total value cannot be increased. And the economic 
necessity for preserving a definite and unchanging standard of 
value makes it essential that the volume of currency, measured 
by the number of nominal dollars, as well as the total value of 
the whole, shall conform to conditions which change but slowly. 
The limitation on the quantity of land is modified by the em- 
ployment of an increased amount of capital and improved skill 
in agriculture ; so that, practically speaking, it may be said that 
the limit on land fluctuates over a margin as wide as that which 
covers fluctuations in the amount of money. 

The necessary limitation on the number of railways is ap- 
parent ; it is, however, a limitation of precisely the same char- 
acter as that which determines the number of factories or mills 
in a country. The differences are those of degree, not of prin- 
ciple. The conditions which give rise to monopoly in land 
make monopoly possible in every species of property. Great 
wealth, regardless of the form of its investment, is a monopoly. 



276 THE DISTRIBUTION OF WEALTH. 

It will be seen, therefore, that the remedy proposed by Mr. 
George strikes at only one of the causes of the evil which he 
seeks to cure. And if we are to apply the principle of his 
remedy throughout, we must not only abolish property in land, 
but all property, and organize society on the communistic 
principle. 

The causes from which evils spring are, however, productive 
of good. "We do not put out the fire in the furnace because by 
fire cities are consumed ; we do not abolish steam-engines because 
they sometimes explode, nor prohibit railways because they are 
dangerous to operate. We employ safeguards to diminish the 
evils which we cannot wholly prevent. 

If we learn by experience that the aggregation of a large 
amount of land in the ownership of single individuals is detri- 
mental to the interests of society, this is not a good reason why 
we should proceed at once to abolish all ownership. The rem- 
edy need go no further than an evil we seek to prevent or to 
mitigate. 

If we are justified in preventing one species of monopoly 
from which society suffers injury, we are also justified in pre- 
venting every other species of monopoly from which society 
suffers harm, provided only that we find efficient and practical 
means to accomplish our purpose without doing violence to 
natural rights or harm in other ways that may counterbalance 
the good we accomplish. But, in applying measures of relief, 
we may not ignore human nature, which in the end will always 
assert itself and render ineffective any scheme for social or 
economic reform evolved by abstract reasonings from assump- 
tions that run counter to the current of human aspirations and 
desires. 

Eailway companies, telegraph and telephone companies, gas 
companies, and street-railway companies are classed as natural 
monopolies, for the reason that they are not effectively subject to 
control by means of competition. They are therefore considered 
as proper subjects of legislative control. In behalf of these insti- 
tutions, it was at first earnestly insisted that, being private corpo- 
rations, any attempt by legislation to regulate their charges is a 
violation of property rights and a pernicious intermeddling with 
private affairs. This view has been practically abandoned ; but 



THE DISTRIBTTTION OF WEALTH. 277 

the measures by which these charges are to be finally regulated 
have not yet been brought to a high degree of efficiency. 

The policy of governmental ownership has been adopted in 
Continental Europe and, to some extent, in Great Britain, and 
appears there to be an improvement on private management. 
If the policy of public ownership of natural monopolies be not 
adopted in this country, their management and control will, at 
least, be made subject to the supervision of government officials, 
under a system of laws which necessity and experience will 
develop. A long step has already been taken in that direction, 
and further advance will be made at the usual pace which must 
govern movements of this character. The wisdom gained by 
experience is learned but slowly ; and the problem is compli- 
cated by the fact that powers which should be centred in one 
governing body are divided between the general government 
and the governments of the respective States, resulting in a 
divided management of the same subject-matter. 

Nevertheless, the policy of limiting by law the maximum 
charges of natural monopolies has become fully established. 
The reasonableness of such charges must be determined by some 
ascertained standard of measurement. What shall that standard 
be ? The only answer that can be made is, a fair profit on the 
capital invested, after the payment of customary wages and 
reasonable salaries and cost of maintaining the property em- 
ployed. A reasonable profit is the average profit which may be 
permitted to capital in general. But how shall the amount of 
capital be measured ? The amount of stocks and bonds set afloat 
by railway companies is evidently not a rehable basis. This 
amount may be, and often is, two or three times as great as the 
amount actually invested in construction and equipment. And 
in many cases, where it fairly represents the original cost, with 
improvements added, owing to depreciation in values it has 
ceased to be even a near approximation to what would be the 
present cost. 

The value of the lands of the farmer is subject to depreciation 
which results from unlimited competition ; the value of houses, 
mills, and machinery is limited to the amount which it would 
require to construct like machinery or build like houses, the 
present value of labor being the gauge of value for all products 



278 THE DISTRIBUTION OF WEALTH. 

of labor which do not exist in excess of the demand ; but, where 
the demand is exceeded, the value of property of this character 
falls below what would be the cost of reproducing it. The 
property of natural monopolies not being in like manner subject 
to competition, its value is determined by the rate of profit it 
may yield. Unless this class of property shall be, in the in- 
terest of capitalists, made an exception to the operation of the 
general rule which determines the value of other property, and 
the profits of capital otherwise invested, the only true gauge of 
the capital of railway, telegraph, or gas companies, on which a 
profit should be permitted, is present value, as determined by 
what would be the present cost of construction. 

It therefore follows that it is the duty of the government to 
ascertain present values of property of this class, upon the basis 
of present cost ; and that such value, when ascertained, should 
constitute the basis of established charges for the services or 
the products of natural monopolies. No advantages resulting 
from the necessary absence of competition in any industry can 
legitimately belong to any individual. Progress in the direction 
of fixing an equitable basis for legislation determining maximum 
rates of railways for freight and passenger carriage has been 
impeded by the opposition of aggregated wealth, which ia 
always a most potent factor in shaping legislative action, where 
its interests are concerned. 

In the census of 1880 the total permanent investments of 
railways per mile is reported at $59,718. The cost of construc- 
tion of roads is set down at $47,387 per mile, and the cost of 
equipment at $4817 ; the value of lands owned, including build- 
ings, at $1191 ; the value of telegraph lines, etc., at $2361 ; and 
stocks and bonds owned (issued by other companies) at $3962 
per mile. This would make the cost per mile of construction 
and equipment of roads, with lands and buildings used for 
depots, etc., $53,395, which is double what would be the present 
cost of the same railroads economically built and equipped, 
taking the right of way at the amount which was actually paid 
for it. Most of the railways in the United States, through the 
greater part of the length of line, are built over level lands, 
where the cost of grading is light. The rails now in track are 
not worth more than thirty-five hundred dollars per mile, and 



THE DISTEIBUTION OF WEALTH. 279 

the ties from six hundred to one thousand dollars, according to 
location. 

Eailway property should be subject to the same reductions in 
value as other property ; for otherwise the equilibrium between 
different interests is destroyed. If railway property were 
owned by the government, this question would not arise. The 
profits arising from railway traffic would then assume the 
character of a tax to be expended for the common benefit. 

Owing to the great danger to life and limb to which workers 
in the employ of railway companies are exposed, resulting in 
the creation of a class of persons who have been by accident de- 
prived of the ability to support themselves and families, a part 
of the revenues derived from railway traffic ought to be applied 
to the support of employes who have been crippled in the ser- 
vice, or to the support of those naturally dependent upon them. 
The distribution of this fund might be regulated according to 
the principles and methods of life and accident insurance com- 
panies. A measure of this character would be in accord with 
sound public policy, and would impose no hardships on the peo- 
ple, whose chief concern it is to see that natural monopolies be 
not made agencies for the undue aggregation of wealth. 

Another form of natural monopoly is the ownership of land. 
The ownership by one individual of a certain tract of land 
means the exclusion of all others from any right or title to, or 
control of, such tract ; and the ownership of a limited number 
of persons of the entire area signifies that other people must do 
without. Social and economic conditions do not permit that 
land be equally divided, nor that every man be the owner of a 
part. When ownership of the entire area is so widely distrib- 
uted among the people as to confer no excessive advantages 
upon any one individual, or class, thus preserving an approx- 
imate equality of opportunity to all, the conditions conform to 
the demands of justice and the practical requirements of indus- 
trial prosperity and social progress. 

But, because a man may own land, it by no means follows 
that he has the right to own all he may be able to acquire. 
The right of the state to prescribe a limit to the ownership of 
a limited gift of nature is obvious ] and that public policy re- 
quires the exercise of that right, in order to prevent the evils 



280 THE DISTEIBUTION OF WEALTH. 

which have grown up in Europe and are now establishing them- 
selves in this country, appears equally clear. 

Heretofore, in this country, there has always been land open 
to settlement ; but we are now rapidly nearing the time when 
the supply of raw lands will be exhausted and all the desirable 
land in the nation will be in the hands of private owners. The 
demand, which then can no longer be supplied out of an unap- 
propriated public domain, will increase, and prices will advance ; 
and those who have had the misfortune to be born too late, of 
parents who have failed from inability or neglect to adequately 
provide for their coming, will find the task of securing a farm 
one of great difficulty ; and, in time, land will be wholly beyond 
the reach of the common laborer. 

Then the owner of land will have an obvious advantage over 
him who owns none. He will be in possession of a kind of 
property for which the demand will exceed the supply, which 
labor cannot create, and which no human power can increase. 

The amount of unappropriated public lands available for 
agricultural purposes is very much less than is commonly sup- 
posed. It is true that there is a wide expanse of territory 
reaching from the longitude of Western Kansas to California, 
which, with the exception of a few spots, is unoccupied. Owing 
to the want of sufficient rainfall, there is but little of this land 
which is arable without the aid of irrigation, and that which 
there is is already taken and in cultivation. Irrigation appears 
to be limited to the valleys among the mountains, and those 
lands which are susceptible of irrigation without great expense 
are practically all occupied. By means of expensive dams and 
canals the area of irrigated land may be somewhat extended; 
but the limit of the annual rainfall is such as to forbid a wide 
extension of the cultivated area. The Missouri Eiver, which 
drains a basin of five hundred and eighteen thousand square 
miles, annually discharges only about one-tenth more water than 
the upper Mississippi Eiver (from the Missouri north), which 
drains a basin of only one hundred and sixty-nine thousand 
square miles, less than one-third the area drained by the Missouri, 
which embraces three-fourths of Montana, about two-thirds of 
Northern and all of Southern Dakota, three-fourths of Wyoming, 
one-third of Colorado, Nebraska, part of Iowa, the northern half 



THE DISTRIBUTION OF WEALTH. 281 

of Kansas, and two-thirds of Missouri. In part of this territory, 
embracing Missouri, the greater part of Kansas and Nebraska, 
and part of Iowa, there is about the average rainfall ; from this 
an inference may be drawn as to the remainder. A great part 
of the lands of both Northern and Southern Dakota, Western 
Nebraska, and "Western Kansas, without irrigation, cannot be 
profitably employed for purposes of tillage, and a very small 
per cent, of the lands of Wyoming, Idaho, Nevada, Arizona, 
and New Mexico can be used for any purpose except grazing. 
There arc rich valleys in Utah and Nevada ; but the per cent, 
of arable land is very small. The same is true of Montana, 
Eastern Washington, and Oregon. The truth is, our valuable 
public lands are gone. What some new scheme of irrigation 
may accomplish it would be unsafe to predict, but I have little 
faith in any great addition to the amount of arable land by 
means of irrigation. 

Mr. Josiah Strong, in " Our Country," sa3's, " Driven from the 
plains east of the Eocky Mountains, the ' Great American 
Desert' seems to have become a fugitive and a vagabond on the 
face of the earth." And it is true, that if an individual travel- 
ling through this country were required to locate the " Great 
American Desert," he would find little choice in territory. 
Most any of it would make a respectable desert, or a good 
mountain resort. The American Desert is a vagabond in the 
great West, equally at home wherever he finds himself, on the 
arid plains between Kansas and the Rocky Mountains ; and he 
appears somewhat familiar with Western Kansas. 

Soon the tide of emigration will turn backward ; the in- 
justice of large ownerships will then begin to be felt, and before 
many years have passed will press heavily upon the common 
people. Then the evil will be corrected. In Great Britain land 
monopoly stands intrenched behind venerable titles and caste 
distinctions. The people, divested of power, their customs, 
habits of thought, social relations, and religious opinions all 
cast in the mould of fixed conditions, and develoj^ed through 
the course of many centuries of a slow-growing civilization, are 
slow to feel the need of new conditions unknown to their ex- 
perience; and they move on in the ancient grooves. The 
American people, trained to independent thought, animated by 



282 THE DISTEIBUTION OF WEALTH. 

the belief that the rights of all men are equal, feeling no regard 
for mere class distinctions, their ideas and habits of thought, 
their aspirations and ambitions developed and nourished in an 
atmosphere of universal freedom, will never consent to be 
shackled by conditions which they know to be unjust. They 
hold the ballot ; when awakened to action they control legisla- 
tures ; and when constitutions are in their way they alter them. 
But since a change must come, it is better that it begin now 
with conservative measures, and while we may proceed with 
caution. After a time the people may get in a hurry ; and 
people in a hurry seldom do things well. 

A limitation might be fixed on the amount of land one indi- 
vidual shall be permitted to own. I am, however, of the opin- 
ion that the operation of well-adjusted revenue laws, as sug- 
gested in the chapter on taxation, would afford the relief required. 
But some adequate measure should be adopted now. Large 
bodies of land ought not to be held, so as to enable the owners 
to speculate out of the advance in values which the pressure of 
events must soon compel. 

ARTIFICIAL MONOPOLIES. 

Artificial monopolies exist where an individual, by means of 
the employment of great wealth, or several individuals, by means 
of combination among themselves, restrict competition in pro- 
duction, or in buying or selling, and thereby fix prices of com- 
modities either above or below the natural standard which is 
determined by the result of unrestricted competition. The 
number of natural monopolies is large ; but their success in con- 
trolling or modifying the effects of competition varies according 
to the wealth which they may control, or the thoroughness of 
combination which they are able to effect. 

These combinations are not necessarily, and perhaps not gener- 
ally, made in the form of an express agreement. Where the 
number of competitors is not too large, tacit understandings are 
often almost as effectual as express agreements to restrain com- 
petition. But in the absence of an express agreement, or a 
marked effect on prices, the term monopoly is not applied. The 
principle is, however, the same, whether the combination be 
extensive and organized on the basis of an express agreement 



THE DISTRIBUTION OF WEALTH. 283 

or confined to a few individuals acting with some degree of 
concert to promote a common object. It is a principle which 
cannot be eliminated from business transactions. Hence results 
a difficulty in the application of direct legislative remedies. 
One of the most powerful monopolies ever organized in this 
country is the Standard Oil Company, which controls almost 
the entire coal-oil product of the United States. In behalf of 
this company it is claimed that it furnishes oil to the consumer 
cheaper than it could otherwise be furnished. The claim may 
be true ; and if the only question involved was a question as to 
the price of coal oil, this monopoly might perhaps justify itself 
on the plea of cheap oil. The question involved, however, is 
one which relates to the aggregation of wealth through an 
accumulation of large profits in the hands of a small number of 
persons, resulting in the building of immense fortunes which 
absorb the savings of the people. While the people are being 
cajoled with the assurance of cheap oil, they are being bound in 
fetters of iron, which they may neither break nor unloose. 
They are entering upon an everlasting servitude to the Croesus 
in whose doubly-locked vaults are stored the gold that moves 
and controls a nation's commerce, who draws to himself houses 
and lands, and by insidious stealth robs the nation's poor. 

PATENT RIGHTS. 

As a means of absorbing and aggregating the wealth of the 
people, there have been no more potent agencies than patent 
rights. The evil does not lie in the mere fact that the prices 
of patented articles to the consumer have been high; for, as 
measured by the increased power of the new device or machine 
over the old, prices have always been low. Patented articles 
which sell, as measured by utility or convenience, are always 
cheaper than those which they displace, and it is for this reason 
that they supplant them. The evil lies in the power that is 
conferred upon the owner to aggregate wealth. 

To illustrate. Suppose that A has an entire monopoly on 
the trade in sewing-machines, and that on each machine sold 
he is able to make a clear profit of twenty dollars. He sells 
two million machines each year for ten years. As a result, 
four hundred million dollars of the nation's money pass into 



284 THE DISTRIBUTION OF WEALTH. 

his hands over and above what he pays out to defray the cost 
of manufacture and distribution. Eating the interest value 
of capital at six per cent., at the end of ten years A has 
accumulated over six hundred and fifty million dollars. The 
entire amount passes into his hands as money. The money 
leaves his hands, first, in payment for what he consumes in food, 
clothing, a residence, personal service, and so on. We will sup- 
pose that in this manner he expends fifty million dollars. The 
remaining six hundred million he may either loan on mortgage 
notes, or he may invest it in lands, houses, railway stocks, and 
mills. It is immaterial what form this vast amount of accu- 
mulated capital may assume. The result is that A owns and 
controls six hundred million dollars' worth of property used by 
other people, and for which those who use it pay him tribute. 
He has a permanent and rapidly-growing mortgage upon the 
future labor of the nation, a mortgage which can never be 
discharged. For how can the people pay it, so as to relieve 
themselves from tribute? In money? Money must not be 
withdrawn from circulation; and, besides, money merely ex- 
presses the obligation of the people to pay on demand so much 
of the products of labor. Can they pay it in foods, clothing, or 
personal service? A and all the non-producers dependent on 
him for support can consume only a small part of the annual 
increase. No : A has possession and absolute control of six 
hundred million dollars' worth of the permanent property of 
the country, in which alone savings can be stored, and the 
opportunity of the people to save and accumulate property has 
been diminished in that amount, and will continue to diminish 
in the ratio of the increase of A's fortune. The wealth of A 
means the dependence and the poverty of B, C, and D. "Wealth, 
when it reaches beyond the property which the owner makes 
use of, lays its hands on that which must be used by other 
people ; it means the power of one man over another. 

Grive to A six hundred million dollars' worth of houses and 
lands, and A is a millionaire ; then give to every other man an 
equal amount, and none are rich. A could reside in but one 
house, and there would be no renters to occupy the others. 
His property would cease to bring tribute ; it would cease to be 
power. 



THE DISTRIBUTION OF WEALTH. 285 

Great wealth is merely power centred in one-man to derive 
revenue out of the necessities of other people. Great wealth 
cannot exist without corresponding poverty, any more than a 
king may e±ist without subjects, or a creditor without a debtor. 

It is beyond the power of the people to pay to A the debt 
which they have contracted. They have bound themselves in 
perpetual bondage. Their ears are bored and they are servants 
forever. 

What is the remedy ? Eepeal the patent laws ? No : the in- 
ventor should be protected and recompensed. He should receive 
liberal compensation as a reward for his genius and persever- 
ance. But he is not entitled to the earth. He is not entitled 
to ride forever on the back of impoverished toil. He invented 
a machine ; the people made the market. 

THE VITAL QUESTION. 

The public mind is often agitated on the subject of a cheap 
railway service, as though it were merely a question of rates. 
The important question always is. What becomes of the profits? 
Are they distributed in the hands of a great number of con- 
sumers, or gathered and stored in the great and growing for- 
tunes of a few? When one man accumulates a fortune of 
millions by depressing the values of railway stocks by ruinous 
competition, or skilful bad management, then by bringing up 
the values of stocks so depressed and restoring their values, or 
by manipulations of the market, the people look on with little 
concern. It is to them merely a battle between the bulls and 
the bears, in the result of which they have no concern. It is a 
grave mistake. After a time the people will realize that they 
are weighted with a burden too heavy to be borne, and they 
will cast it off in violence and wrath. 

The shipment of cattle to foreign ports is at present under the 
control of a trust or syndicate of persons who control the trade 
and enjoy the profits. If any one outside the combination seeks 
to make a shipment, he finds the vessels employed in the trans- 
portation all engaged. 

The meat-trade of the nation has become an overgrown 
monopoly, with the power to move prices up or down at will. 
The " Big Four" stand at the gate-way of commerce and exact 



286 THE DISTRIBUTION OF WEALTH. 

their toll from producer and consumer alike. To wliat extent 
prices are affected cannot be told. The Senate committee now 
making investigation of that subject will not be able to de- 
termine. But that a few men are piling up mountains of 
wealth and robbing the people of their inheritance we already 
know. 

Though the price of cattle and hogs to the producer be not 
lowered, and though the price of meat to the consumer be riot 
raised, a few are enjoying opportunities that should be the com- 
mon privileges of many, and building fortunes that can serve no 
purpose but to lay the people under tribute to themselves and 
those who shall succeed them. When the rich grow richer, the 
poor grow poorer. The figures that stand in bas-relief on the 
face of the embossed shield may be traced in corresponding 
depressions on the other side. 

Statesmen should concern themselves less about the price of 
pork and beef and more about the absorbing power of aggre- 
gated wealth. The profits of trade, widely distributed, furnish 
continuing opportunities for the growth of those small accumu- 
lations of wealth which make provision for sickness and old age 
and dependent children, and furnish opportunities for the cul- 
ture that refines and purifies social life, — fortunes the incomes 
from which are returned to the people again in exchange for the 
products of labor, — small reservoirs giving out a steady supply, 
emptied and replenished again from the ever-flowing stream 
of trade. But when the golden stream of profit is poured into 
the Dead Sea of a millionaire's fortune, there is no outward 
flow. 

The number of persons engaged in trade and transportation, 
aside from banking, insurance, and newspapers, as shown by 
the census of 1880, was 1,700,385. Of these, 1,122,481 were en- 
gaged in trade, and 557,904 were employed in transportation. 
The cost of transportation added to commissions and the per- 
centage of merchants amounts to about fifty per cent, of the 
value of the product distributed. The number of persons en- 
gaged in transportation is not in excess of the number required 
for this service. But the number of persons engaged in trade is 
much in excess of the number necessary. 

It is a common delusion that competition always tends to re- 



THE DISTRIBUTION OP WEALTH. 287 

duce prices. In trade it is necessary for each merchant to 
obtain a profit sufficient to pay rents, interest on capital, cost 
of advertising, and clerk hire, and to furnish a living for him- 
self and family. These are fixed charges, which cannot be 
avoided, and which increase as trade is subdivided. Therefore, 
while tbe direct effect of competition in trade is to lower prices, 
after a certain point has been passed the tendency is to main- 
tain prices above the necessary cost of distribution. The evil, 
however, which grows out of this tendency is not of serious 
consequence. A far greater evil is the monopoly of trade by 
persons or corporations of great wealth. 

The fierce competition in trade is a war at the expense of the 
consumer, and from which the consumer does not always derive 
sufficient advantage to pay the cost of the war. It is a com- 
petition in which the strong destroy the weak ; a competition 
in which cunning schemes and petty deceits are most effective 
weapons. 

The skill of the mechanic is exercised in perfecting and add- 
ing value to the product of his labor. The skill of the mer- 
chant is employed in contesting with his neighbor for a larger 
share of trade. The skill of the mechanic creates property ; the 
skill of the merchant increases his own share of profit chiefly at 
the expense of his competitor. 

It is true that the people may be better served by an intelli- 
gent and competent merchant ; they may also suffer loss from 
the superior skill of the successful merchant. Skill in trade is 
not always to their advantage. The skilful angler who catches 
the most fish is a more useful man than his shrewd companion 
who outwits him in dividing the string. 

The large accumulations of middle-men are not always the re- 
wards of a proportionate service rendered the people, but are 
often only the measure of the ability of the merchant to help 
himself. The risks of trade, against which the merchant in- 
sures himself by large profits at the expense of the consumer, 
are often the results of manipulations in the interest of capital. 
Speculation, disguised under the name of "enterprise," is every- 
where, with its hands in the pockets of the people gathering 
together hoards of wealth. 

Gambling on boards of trade, in stocks or in provisions, is a 



288 THE DISTRIBUTION OF WEALTH. 

public evil loudly condemned by religious teachers and theoretic 
morahsts because of the " sin" of it. The sin, however, is not 
ordinarily apparent to laymen, few of whom would be restrained 
by scruples of conscience from engaging in this form of specula- 
tion could they feel assured of success. Public opinion on this 
subject is loud-mouthed rather than earnest. The evil is 
respectable and does not shock the public conscience. 

Speculation enters into most business transactions, and is con- 
sidered legitimate, since it is unavoidable. It is not, however, 
productive of good to society, and pure speculation unconnected 
with the transaction of legitimate business is unnecessary. It 
creates nothing, and is employed solelj^ as a means of aggre- 
gating wealth. It is at war with a sound social economy. The 
evil lies in the fact that it disturbs actual values along the lines 
of legitimate trade ; that it demoralizes the people and builds 
up colossal fortunes. It should be assailed on economic grounds, 
as an enemy of labor, and suppressed by legislative. restrictions; 
It is a waste of words to condemn men who deal in futures and 
corner markets. Their conduct may afford a theme for the 
rhetorician, but it does not shock the public conscience. This 
evil cannot be successfully assailed from the stand-point of 
religion or morality; it must be dealt with as a question of 
economics which concerns the material welfare of the peox)le. 
Trade monopolies might perhaps be successfully dealt with by 
means of a progressive tax upon gross sales above a certain 
amount, or by the employment of graded income taxes. When, 
however, the public is fully awakened to the wrongs which 
are perpetrated in the name of " business," and to the extent 
of the injury to the working-people, no great difficulty will 
be experienced in discovering and applying adequate rem- 
edies. 

The people must learn that great wealth is necessarily a 
monopoly, and that the right to limit the extent of trade that 
may be controlled by any one individual belongs to the people 
who furnish the market. 

Every State constitution should be so amended as to leave the 
power in the Legislature, restrained by judicious limitations, to 
employ taxation as a means of restricting monopolies, and the 
growing aggregation of wealth. 



THE DISTEIBUTION OF WEALTH. 289 



TRXJSTS. 

Trusts are combinations of capitalists engaged in manufacture, 
trade, or transportation, by means of which the profits or prod- 
ucts of each are divided upon some agreed basis, for the pur- 
pose of regulating and restricting competition. There are many 
combinations entered into for this purpose, without any sharing 
of common profits. Sometimes the combination effects its pur- 
pose by arbitrarily fixing prices, and sometimes by restricting 
production. But, aside from such combinations, capital engaged 
in production is always careful to gauge its product to the 
effective demand. 

In many branches of manufacturing industry the capacity to 
produce greatly exceeds the demand. For instance, during the 
census year of 1880, blast-furnaces were in operation, on an 
average, but eight months out of twelve ; and the steel-furnaces 
were run, on an average, but nine months during the year. 
During the year 1886, seventy-five per cent, of the coal-miners 
in Illinois were employed but one-half the time. The Massa- 
chusetts census of 1885 shows that the capacity of the manu- 
facturing establishments in that State was equal to the advan- 
tageous employment of 438,229 hands; yet the total of the 
highest number employed in each industry, at times of the 
largest employment, was but 304,159, while the lowest number 
employed was but 177,381 ; showing that, during part of the 
year, the working-force was curtailed nearly fifty per cent, 
below the number of highest employment. 

In gauging the number of its working-force, capital neces- 
sarily consults its own interest. It is by this means that prices 
of manufactured goods are kept steady and maintained at a 
figure sufficient to yield a good margin of profit. 

In agriculture, where worker and capitalist are generally 
combined in the same person, where production is subdivided 
among over four million farmers, no such power to regulate the 
quantity of product exists. The amount of the product varies 
from year to year, and prices fluctuate over a wide range varying 
as much as fifty per cent, within the limit of two or three years. 

The manufacturer employs his labor at stated wages, "and 
makes his product out of materials which he purchases. He is 

19 



290 THE DISTEIBUTION OF WEALTH. 

therefore under the necessity of keeping within the demand of 
the market, at prices sufficient to cover a fixed cost of produc- 
tion. When the prices of farm produce go unexpectedly low, 
the farmer, who, relatively, hires but little labor, deducts the 
loss from his own wages, which are not paid until the product 
is sold, and are represented by the price received. 

If, in manufacturiDg, the price of labor and materials yielded 
promptly to a fall in price of product, and consisted merely of 
a certain proportion of the price received for the product, this 
absolute necessity for restricting production would not exist. 
But the manufacturer buys both his labor and materials at a 
stated price. They cost him, on an average of the industries, 
about three-fifths of the value of the finished product. The 
cost of materials and labor must be paid, no matter what price 
the product may bring. We have here one of the effects of 
the subdivision of labor and of the severance of the interests 
of capitalist and worker. 

This necessity, which controls manufacturing industries, com 
pels a frequent curtailing of the working-force, and leads to 
frequent suspensions. 

The amount of manufactured product is not dependent upon 
the seasons, or other like circumstance, that affect the agricult- 
ural product ; and the employer of capital gauges his product 
according to the market, — not according to the demand at some 
price, but according to the demand at the figure which he fixes 
as his selling price. 

This power over production, necessary for the protection of 
capital, is employed to maintain or to advance prices, and ia 
subject to constant abuse. 

It is to the common interest of all classes that labor be uni- 
versally and constantly employed, and that the total product 
should be as large as it can be made, or as large at least as can 
be consumed. But it is important that labor be properly dis- 
tributed and that production in each industry be relatively large. 
If this condition could be established and maintained, there 
would be no occasion for poverty, except as the result of acci- 
dent, disease, or wilful idleness. But under the conditions which 
actually prevail, poverty is unavoidable ; it is a necessary result 
of the present industrial arrangement. 



THE DISTRIBUTION OF WEALTH. 291 

While industry in general is most prosperous wlien pro- 
duction is greatest, provided there be at the same time an 
equilibrium of production between the industries, — that is, a 
production in each industry relatively large, — yet any particular 
industry, by restricting its production, and thereby enhancing 
the value of its product, may gain at the expense of the other 
industries. 

Let the number 100 represent the product of the cotton-goods 
industry that may be sold for an amount which covers a fair 
margin of profit, and which we will also designate as 100. Now, 
if this total product be reduced to 90, the price of cotton goods 
will advance, the supply having fallen below the demand at the 
old price. A product of 90 will not only bring a higher price, 
but the total value may be more than that of a product of 
100. But if the product be increased to 110, the price will fall, 
and the total value of the whole may be less than 100. Thus 
the margin of profit may be increased by restricting production. 
What is true of one industry is true of every other industry. 
The principle here illustrated is well understood. 

There is, therefore, at all times, independent of express com- 
binations, a strong tendency towards the restriction of the prod- 
uct. The manufacturer of cotton goods is on the alert to 
maintain prices and to prevent the market from being over- 
stocked. He employs only the labor required to meet the 
demand at certain prices ; the manufacturer of woollen goods 
does the same. If the demand weakens, he reduces his working- 
force. Men out of employment must limit their consumption ; 
consumption being reduced, weakens the demand. Thus, as 
production is restricted at all points, the demand is likewise 
restricted, and the contest between capitalists, to preserve the 
margin of profit, has the effect to reduce the demand for their 
product. The workers who are thrown out of employment, 
crowded out of the circle of production and distribution, are 
kept out, because there is no demand for more product; and 
there is no demand for more product for the reason that labor is 
unemployed and unable to supply its wants. 

Formerly, when the amount of capital required to make labor 
available was small, and most workers were their own employers, 
creating their product and getting their wages out of the price 



292 THE DISTRIBUTION OF WEALTH. 

that product brought in the market, the present condition was 
not possible. Labor distributed itself through the several in- 
dustries according to a demand which was steady and subject 
to only slight vacillations ; and the product of one industry was 
not liable to a sudden increase out of proportion to the products 
of other industries. The employment of machinery run by 
steam, combined with the use of large amounts of capital in 
single establishments, has brought about a condition leading to 
frequent disturbance of the equilibrium of the industries, and 
making the worker dependent upon the interests of aggregated 
wealth which now controls production. 

The worker can no longer employ himself. He must find an 
employer or lie idle. The interests of the employer compel him 
to limit his production ; and, in the contest to maintain prices, 
large numbers of working-men are kept out of employment. 
The less competent are the ones who suffer most; and since, 
relatively, there must always be a weaker class, that class must 
bear the principal burden of competition, and many are con- 
tinually pressed to the extremes of poverty. One individual 
may rise above his class ; but some other person is crowded into 
the place he leaves vacant. As a class, the poor are powerless 
to extricate themselves from the condition made for them by 
agencies over which they have no control. They are a product 
of our industrial civilization. They are the victims of a fate 
from which they cannot escape. Paupers are the industrial 
correlatives of millionaires. 

The prevention of trusts and combinations, it will be seen, 
while it may remedy, cannot eradicate the evil. The problem 
is one of extreme difficulty, requiring time for solution. But 
when the theory that capital can do no wrong, and that all 
competition is legitimate, is abandoned, and the idea of pro- 
moting the welfare of the working-people takes control of 
legislation, the way will be opened; there will be light enough 
to mark the pathway to each advancing step. What is most 
needed now is a clear understanding of the causes of existing 
evils. If, in addition to remedies of a general character, sug- 
gested elsewhere, more special legislation be required, no insur- 
mountable obstacle will be met with. The principal obstruction 
that stands in the way of remedial measures is the lack of 



THE DISTRIBUTION OF WEALTH. 293 

knowledge among working-men of the causes of industrial 
evils. 

The doctrine that "whatever is is right," so persistently main- 
tained by writers on economic science, has been generally ac- 
quiesced in, if not sanctioned ; but working-people must learn 
that labor and capital have interests that conflict as well as 
interests in common, and that legislation whose policy is shaped 
by representatives of aggregated wealth alone is not always 
best adapted to promote the welfare of the people. 

The conditions of industrial oppression which prevail in all 
old countries, where, with great wealth in the hands of a com- 
paratively small number, the masses are deprived of all oppor- 
tunity to gain a competence, and many are unable to obtain the 
ordinary comforts of life, is proof enough that the wheels of 
evolution need to be lifted out of the old ruts. 



CHAPTEE X. 

WHAT MAKES THE RATE OP WAGES. 

Writers on political science have devoted considerable space 
to abstract reasonings regarding the " law" of wages, in search 
of a definite and concise formula for the expression of that law, 
with the result that cheap generalizations, arrayed in the uni- 
form of so-called scientific thought, have been successfully 
paraded as " laws" of economic science. 

Of this order is the wage-fund theory, until recently quite 
generally accepted and adopted by even as profound a writer as 
John Stuart Mill. The theory is that wages are paid out of a 
certain limited fund, which consists of the amount of capital 
which, at any one time, may be devoted to the purchase of labor ; 
and that therefore the rate of wages depends upon the ratio of 
the number of workers to the amount of capital devoted to 
their payment. Mill says, " Wages depend, then, on the propor- 
tion between the number of the laboring population and the 
capital or other funds devoted to the purchase of labor ;" and 
again, " Since, therefore, the rate of wages which results from 



294 THE DISTRIBUTION OF WEALTH. 

competition distributes the whole wage-fund among the whole 
laboring population, if law or opinion succeeds in fixing wages 
above this rate, some laborers are kept out of employment ; and, 
as it is not the intention of the philanthropists that these should 
starve, they must be provided for by, a forced increase of the 
wage-fund by compulsory saving." 

This theory has been exposed to elaborate analysis by differ- 
ent writers, who have made plain its fallacy. It has ceased to 
be of interest except as a part of the history of the growth of 
the science of political economy. It is diflScult, however, to com- 
prehend how an able student and author like Mill could fall 
into an error so transparent. 

Eicardo, speaking on the subject of wages, says, " The nat- 
ural price of labor depends on the price of food, necessaries, 
and the conveniences required for the support of the laborer ; so 
that with a rise in the price of food and necessaries the price 
of labor will rise, and with a fall in the price the natural price 
of labor will fall." 

Dr. Wayland says, " By free competition wages are adjusted 
to the ratio between the amount of capital seeking labor and 
the number of laborers seeking employment ; competition it- 
self being modified by some regard to the cost of living, the 
productiveness of industry, established custom, and the prompt- 
ings of good- will between man and man." Speaking of demands 
of workers for higher wages, he says, "A claim is reasonable 
when the necessities of the laborers require, and the actual 
profits of the industry permit, the increase of wages or what of 
better terms is insisted on." 

It will be observed that the theory here advanced is that the 
worker is not entitled to anything beyond what his necessities 
require. A claim to that much is reasonable, when the profits 
of the industry are sufficient to justify it. The claims of the 
horse to his keep, and the working-man to his subsistence, it 
will be seen, are, in the eyes of political economists, defined 
according to the same rule. 

Professor Walker, who rejects the wage-fund theory, and 
recognizes the obvious fact that wages are a portion of the 
product created by labor by which the wages are said to be 
earned, seeks to define a rule or law by which the proportionate 



THE DISTEIBUTION OF WEALTH. 295 

amount due to labor and the proportionate amount due to capi- 
tal may be determined. He makes a new application of Ricardo's 
law of rent, and constructs a sort of metaphysical mitre-box, by 
the aid of which the total product may be cut in two at the 
right place and at the proper angle. 

Ricardo's law of rent appears to be a formula devised as a 
justification of the rapacity of landlords. Concisely stated 
it is : "The rent of land is determined by the excess of its 
produce over that which the same application can secure from 
the least productive land in use." Assuming that, from the 
effect of competition, wages, as well as profits on capital, are 
necessarily reduced to the same level, this rent theory would be 
true. It is, however, only approximately true ; and as a rule 
of practical application it is misleading. Take, for instance, 
agricultural lands. Here is one section of country where the 
lands are poor and unproductive. Such lands may be occupied 
in large bodies for grazing purposes, deficiency in quality being 
made up in quantity. But we will suppose that portions of 
this poor land are used for tillage, and occupied by poor people 
who obtain a mean and precarious subsistence ; near by may be 
fertile lands many times as productive. According to the 
theory of Ricardo, the renter of the fertile land, after paying 
his rent, would have nothing left above the mean subsistence of 
the people on the poor lands near by. Yet every person of 
observation knows that tenants or renters on the most produc- 
tive land fare much better than those on poor lands. If the 
theory were true as a practical rule of action, an individual 
about to rent a farm would need feel little concern about the 
fertility of the soil, since all above a certain stated amount 
would belong to the landlord. The average reward of agri- 
cultural workers varies greatly, within the limits of short dis- 
tances. In one part of a country lands will be quite thoroughly 
cultivated, which will not yield one-half the reward to labor 
that is enjoyed by renters in other sections of the country. 
People adapt themselves to surrounding conditions, among 
which is the measure of the soil's fertility. In the same neigh- 
borhood, the better tenant gets the best lands ; and, while it is 
true that there always is a strong pressure forcing the wages of 
labor of any class to the level of the demands of the most im- 



296 THE DISTKIBUTION OF WEALTH. 

poverished members of that class, there is also a strong counter- 
tendency. But this theory of rent approximates the truth so 
nearly that it should be regarded as a most sufficient reason for 
the adoption of such policy of legislation as will tend to the 
abolition of landlordism. The use which political economists 
are accustomed to make of Eicardo's law of rent is to demon- 
strate the fitness of things as they now exist. 

Professor Walker's theory of wages and profits is that, in a 
state of perfect competition, the profits of the manufacturer are 
not deducted from the wages of the mechanic, any more than 
rent is obtained through a deduction from the prices of agri- 
cultural labor. He holds that profits are measured from the 
level of those employers who receive no profit, as rents are 
measured from the limit of the product of those lands which 
yield no profit, and embrace the whole excess of the product of 
the more valuable lands over the product of the poorest lands 
in cultivation ; so he holds that profits embrace that excess of 
product, created by the exceptional skill or opportunities of em- 
ployers, over the amount of product which is created with the 
same amount of labor, by that class of employers who are able 
to produce nothing beyond the amount required to pay wages, 
or who, in other words, make no profit. 

To illustrate : The demand for woollen fabrics is of a certain 
degree of intensity. To supply this demand industry is organ- 
ized, under the requisite number of employers of labor, and 
capital, or entrepreneurs, as Professor Walker terms them, who 
will naturally be of different degrees of capacity ; those of the 
lowest capacity will be able to make no profits at all, or at most 
a meagre living for themselves and families, amounting only to 
a moderate compensation for their work as managers. As the 
demand may increase, and thereby push prices of the product 
upward, still other and lower grades of entrepreneurs will be 
brought into the field of production, until the no-profit line is 
again reached by the lowest grade of entrepreneurs. Since the 
same wages must be paid by all employers, the part of the prod- 
uct that remains, after paying wages of the workers and cost 
of maintaining capital, will represent profits ; and the quantity 
of this product that remains to the credit of profit, under the 
management of the most skilful entrepreneur^ will be measured 



THE DISTRIBUTION OF WEALTH. 297 

by the excess of product, under his management, over the 
amount of product created by the least skilful entrepreneur who 
makes no profit ; in short, the profit of each entrepreneur will, 
like any other quantity, be measured by its excess over nothing, 
— ten is ten more than nothing. It will be seen that Professor 
Walker's reasoning is verified by the result, which corresponds 
with a most familiar principle of elementary mathematics. 

But, to permit him to explain his own theory : " The price of 
manufactured goods of any particular description is determined 
by the cost of production of that portion of the supply which, 
is produced at the greatest disadvantage. If the demand for 
such goods is so great as to require a certain amount to be pro. 
duced under the management and control of persons whose 
efficiency in organizing and supervising the forces of labor and 
capital is small, the cost of production of that portion of the 
stock will be large, and the price will be correspondingly high ; 
yet, high as it is, it will not be high enough to yield to the en- 
trepreneurs of this gi-ade any more than that scant and difficult 
subsistence which we have taken as the no-profit line. The 
price at which these goods are to be sold, however, will deter- 
mine the price of the whole supply, since, in any one market, at 
any one time, there is but one price for difi'erent portions of the 
same commodity. Hence, whatever the cost of those portions 
of the supply which are produced by entrepreneurs of higher in- 
dustrial grade, they will command the same price as those por- 
tions which are produced at the greatest disadvantage. The 
difference so measured will go as profits to each individual 
entrepreneur^ according to his own success in production, whether 
that be due to exceptional abilities or to exceptional opportuni- 
ties, or to both in one proportion or another." 

Professor Walker, therefore, concludes that profits do not 
come out of wages. The no-profit employers must pay sufficient 
to hire laborers, and the wages of these laborers constitute an 
essential part of the cost of production. The entrepreneurs of 
the higher grades will pay the same wages, — " they will clearly 
pay no less, they need pay no more." 

This is a somewhat circuitous statement of the industrial fact 
that, whatever remains to the employer, after paying the wages 
of his employes at the customary rates, may be set apart as 



298 THE DISTEIBUTION OF WEALTH. 

profit. And if by reaBon of superior skill, or because of ex- 
ceptional opportunity, this remainder be large, his profit will be 
large ; if small, his profit will be small. The amount of his profit 
depends on competition. If there be numerous competitors 
possessing a high degree of skill, and equal opportunities, the 
profit will be less ; if he be without competition, he may advance 
his prices and his profit will be large. 

I admit that the relative profits of different entrepreneurs are 
measured in accordance with the theory here advanced; in 
short, the ratio of profits is determined by the ratio of capacity 
and opportunity. Yet I am unable to perceive in this elab- 
orately-stated theory a solution of any practical question in 
economic science. It does not therefore follow, as claimed, that 
the working-man has no cause for complaint. The fact is not, 
as assumed, that profits are the measure of skill in production. 
The larger profits are to be accounted for in many ways. There 
are, first, the advantages of large aggregations of capital, by 
which a larger volume of business is controlled in proportion to 
the expense of management and cost of distribution. Second, 
there are the advantages of established trade which enable a 
manufacturer to shape his product to the requirements of 
known demands, and dispose of his goods with little delay and 
at fair prices, and at the minimum cost of getting such goods on 
the market. This is not skill in production, but the skill of the 
merchant in promoting his individual interests. Third, there 
are the advantages which, as suggested by Mr. Carnegie, are 
not the least, " of those economies which are exercised by the 
employer in the rate of wages paid to labor." Large profits are 
the result, in great degree, of economy in getting the best 
labor for the particular work done at the lowest prices, and in 
getting the largest amount of work for the smallest pay. 

The rate of wages in two factories may be the same ; but 
the skill of employes in the one is often of a higher order, 
work is pushed with greater energy, and less time is lost by the 
workers. 

There is no lack of competent managers who may be brought 
into the field. And it is not true that the degree of competence 
of the most unsuccessful entrepreneurs is a measure of the de- 
mand for the product. There will always be some managers 



THE DISTRIBUTION OF WEALTH. 299 

who make little or no profit, or who even lose the capital in- 
vested, continuing in business for a time, until their competency 
is tested, and until competent persons may be found and selected 
to take their places. In the adjustment of men to their proper 
positions in the industries it must be that there will be those 
who for a time occupy positions they are not competent to fill. 

For the purpose of a starting-point Dr. Walker locates an 
entrepreneur at the no-profit line, on the theory that a manager 
of the assumed grade is put in such position by force of the 
demand and from necessity, there being a lack of efficient man- 
agers ; whereas, in fact, the no-profit manager in charge of any 
considerable amount of capital and labor is only a temporary 
accident; but he is able to hold his position longer than he 
otherwise might by reason of low wages, which are in part the 
result of the " economies" of the skilful entrepreneur in securing 
labor without equitable compensation. 

It is not true that " the price of manufactured goods of any 
particular description is determined by the cost of production 
of that portion of the supply which is produced at the greatest 
disadvantage." The price of any product is the resultant effect 
of many economic forces. The total amount of the supply, as 
measured against the demand, is the most potent factor oper- 
ating directly in determining prices. To say that any particular 
part of a total product determines the price of the whole is to 
mistake the fact of a correspondence between price and amount 
of wages paid for a cause. In a business, where some must fail 
while others succeed, there will always be a point somewhere 
along the line where the amount of wages paid in production 
corresponds with the commercial value of the product. 

The position of Dr. Walker appears to be this : If there be 
found an entrepreneur running a woollen-mill over in Connec- 
ticut, who takes advantage of women and children by paying 
them but a niggardly pittance for their labor, and who practises 
various other mean economies to the disadvantage of his em- 
ployes, who yet, being a stupid fellow, succeeds merely in 
making a subsistence for himself and family, then every mana- 
ger of a woollen-mill in the whole country is justified in paying 
his employes the same rate of wages, and subjecting them to 
the same mean exactions, and pocketing the profits, no matter 



300 THE DISTRIBUTION OF WEALTH. 

how large they may be ; and working-people have no right to 
complain; for, says Dr. Walker, "Why, in equity or in eco- 
nomics, should a laborer who works for a strong, prudent, and 
skilful master receive higher wages than one whose fortune 
it is to work for a vacillating, purblind, inefficient, or reckless 
entrepreiieur ?" 

In short, if there be one miserable ruffian in town who kicks 
his dog, every good citizen is justified in administering to his 
own dog the same rude treatment, since one dog has no right to 
greater consideration than any other dog. 

A more pitiful exhibition of that heartless indifference to the 
interests of the working-people, which pervades the theories of 
political economists who hold it their mission to defend the ex- 
isting order, will not be found in any treatise on economic science. 

Mr. Attgeld, in " Live Questions," speaking of the wages of 
women and girls in certain manufacturing establishments in the 
city of Chicago, says, " They are at starvation's edge, and they 
never get below that in Europe. For example, two, three, and 
four dollars per week, and board oneself, for ten hours' toil a 
day. So, the wages paid in the cigar manufactories and other 
establishments of the East, as shown by congressional investi- 
gation now in progress, are below what is possible for an 
American to live on. . . . It is almost the lowest European 
standard. Establishments that used to pay ten dollars a week 
to American laborers now pay three or four dollars to imported 
Europeans for doing the same work. It is true that all estab- 
lishments do not employ imported laborers, but enough do to fix 
the standard of wages. If only a few establishments in the 
same line get their work done for four dollars a week by 
foreigners, this will become the standard all along the line, even 
in houses employing Americans, for the latter cannot pay ten 
dollars and compete with the former ; and as it has been shown 
that there is scarcely a line of industry in which these imported 
laborers have not been introduced, it follows that the standard 
of wages has been largely fixed by what these imported people 
will work for. 

" For years we have heard of the Italians, Poles, Hungarians, 
etc., who were imported constantly into Pennsylvania, and in 
many cases where these people refused to submit to further 



THE DISTRIBUTION OF WEALTH. 301 

reduction of wages they were simply discharged, and their 
places filled with fresh importations. So that now Mr. Pow- 
derly claims that almost all American citizens, both native-born 
and naturalized, have been driven out of the mines and manu- 
facturing establishments of that great State." 

We see here, as an evident effect of the ignorance, poverty, 
and dependence, and an established habit of mean living, of 
a class of laborers, a low rate of wages, not to themselves only, 
but to other laborers who oome in competition with them. 

It is to such conditions that Professor Walker would have 
the American working-man resign himself, as to a decree of 
providence ; because he is able to make it clear, by the applica- 
tion of a logical formula, that such must be the result of unre- 
strained competition. 

The fixing of the wages of an individual worker, or of a class 
of workers, is a part of. the complex general adjustment of the 
wages of all classes of workers in the various industries by which 
are produced all the commodities exchanged in the common 
market. The wages of a class, or of an individual even, can- 
not be changed without affecting the adjustment of the whole. 
Wages, though first paid in money, are finally and truly paid in 
commodities or products. For this reason wages are not readily 
changed, except within the narrow limits allowed by those oscil- 
lations which disturb values, and which are occasioned by varia- 
tions in the supply of natural products, fashion, and temporary 
over- or under-production of particular commodities. 

Wages, therefore, may not be arbitrarily fixed by the con- 
tracting parties. But wages in a particular industry may be 
slowly and gradually pushed up or down, and related conditions 
and values will adjust themselves accordingly. 

To illustrate. Let the total product of all the industries of a 
nation be represented by one hundred. Let us then assume labor 
to be divided into five different classes, though the divisions in 
fact are as numerous as the various occupations ; and, besides, 
workers may be classed also with reference to intelligence and 
indigence or independence. But to simplify the illustration, we 
will divide the workers into five classes. 

Let us suppose, in the first instance, that one-tenth part of the 
product is set apart as the share of capital, and that the remain- 



302 THE DISTRIBUTION OF WEALTH. 

ing ninety parts are equally divided among the five classes of 
workers. This will make the share of each class eighteen. 
The statement will stand : 

Share of capital . 10 

Share of Class 1 workers 18 

" II "2 " 18 

" " "3 " 18 

" " "4 " 18 

" " "5 " 18 

Total product 100 

1^0 w, if, without increasing the product, we increase the 
wages of Class 1 of the workers thirty-three and one-third per 
cent., and of Class 2, sixteen and one-third per cent., it is evident 
that the increase in the wages of Classes 1 and 2 must be drawn 
either from capital or from the other classes of workers. But 
an increase in wages reduces but little, if at all, the aggregate 
profits of capital. 

The gain of Classes 1 and 2 will be at the expense of the other 
classes, and the statement will stand : 

Share of capital 10 

Share of Class 1 workers 24 

" « "2 " 21 

" " "3 " 15 

" " "4 " 15 

" " " 5 " 15 

Total product 100 

We have here assumed, what is not in fact true, that the 
shares of Classes 3, 4, and 5 would be equally affected by the 
increased wages of Classes 1 and 2. The other classes would 
be unequally affected, according to the direction of the pressure 
and the difference in capacity to resist reduction. 

If we now increase the share of capital, the increase will be 
drawn from the shares of labor, and the loss to labor will, in 
the end, so adjust itself as to fall principally on the most help- 
less class. After the competing forces have had free play in 
adjustment of wages, we will suppose the following statement 
to represent the result. 



THE DISTRIBUTION OF WEALTH. 303 

Share of capital . . 15 

Share of Class 1 workers 25 

" " "2 " 21 

" " «' 3 " 16 

" " "4 " 13 

« " <« 5 " 10 

Total product 100 

So far we have supposed the product to remain the same, and 
we have disregarded money as a medium of exchange and 
measure of wages. 

In the beginning the wages of Classes 4 and 5 amounted to 
thirty-six per cent, of the product, and they were therefore 
consumers of that proportion. Their shares having been re- 
duced to ten and thirteen respectively, they now consume but 
twenty-three per cent, of the product. The demand therefore 
has, in this direction, been reduced in the amount of thirteen 
per cent, by reason of reduced consumption, and in another 
direction increased in like amount by the increased consump- 
tion of other classes. 

This increased consumption would be, necessarily, to a great 
extent, not only of a different class, but of a different grade or 
quality of articles. And, the industries of a whole people having 
adjusted themselves to the conditions arising out of this di- 
vision of the product, the shares of the several classes of workers 
are fixed by the conditions and habits of a whole people, and 
an increase of wages in any department involves the necessity 
of a change in these conditions and habits. 

The division of tlie product is not made direct, as we have 
assumed, but through or by means of the employment of money 
as a measure of values and a medium of exchange. Money is 
employed first in the payment of wages, and second in the pur- 
chase of commodities. The completed payment is not effected 
until labor has been paid for in the products of other labor. 

Capital, whose immediate interest, in order to maintain its 
margin of profit, is to purchase labor at the lowest price for 
which it may be procured in money, exerts a continual pressure 
in the direction of lower wages. 

The total product in the United States might be readily in- 
creased, say, twenty-five per cent. ; and there might be a con- 



304 THE DISTRIBUTION OF WEALTH. 

siderable reduction in the consumption of articles of luxury and 
a corresponding increase of other classes of products. But con- 
sumption is measured by wages, and consumption must keep 
pace with production. 

Increasing production without increasing wages in corre- 
sponding ratio reduces prices, and falling prices are resisted 
by restricted production. If the wages and the consumption of 
Class 5 could be simultaneously advanced to eighteen, absorbing 
the increased product, there would need be no change in prices 
of commodities if the increase in product corresponding with 
the increase of wages did not exceed eight per cent. In this 
event the workers would gain and no one would lose. 

The competition which prevents this represents the struggle 
of individuals for immediate personal gain at the expense of the 
interests of the community in general. Half a dozen large manu- 
facturing establishments engaged in the manufacture of ready- 
made clothing, for instance, each seeking the largest possible 
immediate gain, and finding opportunity in the general helpless- 
ness and dependence of a large class of sewing-women, may 
push prices of labor in that department down to or below the 
equivalent of the measure of the actual necessaries of life. Com- 
peting establishments must manufacture as cheaply or lose 
their trade, and thus the selfish greed of a few may fix the 
compensation of great numbers of working-people. By this 
course the general market for labor is restricted to the extent 
of the reduced capacity of these poorly-paid workers to buy the 
commodities of labor which they would desire to consume, and 
the community gains nothing. The community is abundantly 
able and willing to pay these workers liberally in food, cloth- 
ing, and shelter ; but the system of exchange, under the pressure 
of that selfish competition in which each endeavors to advance 
his own interests at the expense of society, prevents it. 

The existence among the poorly-paid classes of numbers of 
those whose tastes are uncultivated, and whose wants are few, 
who have little ambition, or who, from that necessity which 
attends an impoverished condition, are compelled to accej^t what 
is offered, strongly operates to fix the status of the entire class 
of workers of whom they constitute a part, both as to wages 
and condition in life. 



THE DISTRIBUTION OF WEALTH; 305 

Those combinations of labor which sustain and advance the 
wages of Classes 1 and 2 are necessarily more or less at the ex- 
pense of Classes 4 and 5, who, because of their numbers, 
their ignorance, and their poverty, or because of the competi- 
tion of an indigent and helpless minority among themselves, 
are unable to contend against the competing forces that oppose 
them. 

While, therefore, it is not true that all employers of labor, who 
pay wages that ^re too low, are responsible for the fact that the 
workers in their employ are inadequately compensated, since 
the employers are subject to conditions fixed by others, it is 
true that the greed of many who employ labor is responsible for 
the hard conditions that are forced upon large numbers of 
working-people. 

While those who control capital cannot pay what they 
choose, they can, if they have in general the disposition to be 
just, assist poorly-compensated working-people in a gradual ad- 
vance to fair wages, or, what is the same thing, to a reasonable 
share of the total product. They can at least refuse to lend 
weight to the downward pressure; and they can lend their 
assistance to those gradual changes of condition essential to a 
proper adjustment of the several shares of workers and capital. 

Mr. Henry George, following in the wake of the illumined 
streak poured from the bull's-eye lantern of his logic, explores 
the realms of economic abstractions, and discovers in the mists 
the following : 

" The relation between wages and interest is determined by the 
average power of increase which attaches to capital from its use 
in reproductive modes. As rent arises, interest will fall as 
wages fall, or will be determined by the margin of cultivation." 

This formula, subjected to a careful assay, will be found to 
contain these general truths: First, as profits of capital in 
general increase, the rate of interest tends to advance ; as profits 
diminish, the rate of interest is reduced. Second, as rent ad- 
vances, interest and wages both go down. Neither of these 
propositions are universally true, and the latter is not generally 
true. When profits are large, neither the landlord nor the 
money-lender fails to secure a liberal share ; when profits are 
small, they must both be content with less. There are condi- 

20 



306 THE DISTRIBUTION OF WEALTH. 

tions, sucli as the limited area of land suitable for the purpose 
for which it is required or the scarcity of capital, that affect 
the relative shares of the lender of money, the landlord, and the 
worker ; but these conditions cannot be exhibited within the 
compass of a formula. Propositions like this, made up by the 
mere juxtaposition of related truths, afford little aid in the 
solution of economic questions. 

Of a somewhat similar character is a proposition announced 
by Bastiat, and quoted by other writers on political economy, 
and recently by Mr. Atkinson, who says that, by its application, 
he has been able to observe the phenomena of wages with much 
clearer insight. It is as follows : 

" In proportion to the increase of capital the absolute share 
of the total product falling to the capitalist is augmented, but 
his relative share is diminished; while, on the contrary, the 
share of the laborer is increased both absolutely and relatively." 

Generalizations of this character, declaring the concurrence 

of certain phenomena, without the exhibition of any principle 

^ of sequence, or philosophy of relation, may be manufactured at 

will ; and, possessing the quality of ponderosity, are frequently 

accorded recognition as principles of science. 

Let us examine the proposition just quoted from Eastiat. 
We are met at once by the question, What is here meant by 
"the increase of capital?" If, by this expression, is meant 
simply an increase in the quantity of the tools, machinery, and 
materials employed in agriculture and manufacture, and of the 
store of food and clothing on hand to maintain the worker, we 
have one meaning ; if credits are embraced, we have another ; 
and if by increase of capital is meant not only the actual 
increase, but also that aggregation of wealth which is generally 
included in the description "an increase of capital," we have 
still a third meaning. Taken in the latter sense, the proposition 
is not true. 

From British statistics, as given by Mulball, we learn that in 
1688, when the gentry and middle classes of Great Britain to- 
gether comprised one-tenth of the population, this one-tenth 
enjoyed four-tenths, or forty per cent., of the total amount of the 
incomes of the British nation. In 1800 these classes together 
constituted twelve-hundredths of the population; they then 



THE DISTRIBUTION OF WEALTH. 307 

enjoyed thirty-seven per cent, of the amount of total income ; in 
1883 these classes remained relatively the same as in 1800, but 
enjoyed forty-five per cent, of the total income ; showing that 
from 1800 to 1883 the relative share of capitalists had increased. 
In 1800 the working-people (not including trades-people) were 
less than two-thirds of the whole population ; their share of the 
total earnings was a fraction over one-third of the total earnings j 
in 1883 their number had relatively increased a very little, but 
their share of the total earnings had not kept pace, — we may 
say, in round numbers, that the proportion of numbers and 
earnings had remained the same; yet the proportionate in- 
crease of wealth was fifty per cent, greater than the increase 
of population. These statistics do not take into account the 
much larger proportion of earnings, or of production by means 
of domestic manufacture, in 1800, that are not counted in the 
estimate of earnings. 

Nor is it true that, in the United States, the proportionate 
share of earnings, absorbed by capital in the form of profits, 
interest, and rents, has grown smaller, or that the proportionate 
share of the worker has grown larger. 

It is true that, with the wonderful development in our indus- 
tries and increase in the productive capacity of labor, the 
average earnings jper capita have increased. It is also true 
that the worker has become more dependent, that the number 
of those whose living is precarious and the number who are 
exposed to penury and extreme want have increased absolutely 
and relatively. The proportion of those without homes has 
increased and is still increasing. 

It is not claimed that capital absorbs all the increase of the 
products of labor. But capital is absorbing the principal portion 
of the savings or durable products of labor; and the aggregation 
of wealth in the ownership of a relatively small number of 
persons is rapidly bringing the American people to the condi- 
tion of European people, and is making impracticable that 
general distribution of wealth which is essential to the pros- 
perity and happiness and to the moral and social well-being of 
the people of this country. 

Against the increase of capital there is no complaint. The 
objection lies to the undue aggregation of wealth, and to the 



308 THE DISTRIBUTION OF WEALTH. 

subordination of production to tlie purpose of building fortunes 
for a few at the expense of interrupted industry, unemployed 
working-men, and the oppression of a large and growing class 
of helpless and dependent poor. If it were true that the average 
earnings of a working-man are suflS.cient, the fact that there are 
large numbers whose compensation is neither adequate nor just 
still remains. Justice is not satisfied with general averages. 

It is no answer to the claims of the working-people to say 
that the earnings of labor have increased, and are more now 
than formerly. 

There are admitted evils. It is not the principal duty of 
political economists to hunt excuses for them; their efforts 
should be expended rather in seeking the cause and the reme- 
dies. 

It is not the purpose of this chapter to formulate a " law" of 
wages or a "law" of profits. The statement of the principle or 
causes by which the relative shares of capital and labor are 
determined, and the definite results of their operation, can no 
more be compressed within the limits of an economic formula 
than the law which determines the force of the wind or the 
height of a wave. Wages constitute one part of the product of 
labor, profits of capital another part. The relative sizes of these 
shares are the resultant action of many conflicting forces. 
What these forces are, the influences that limit and control 
them, and determine their power and intensity, I have sought 
to make clear in the several chapters of this book. The purpose 
of this chapter is to exhibit the tenor of doctrines held by 
writers of acknowledged merit on economic science. 

As an author whose views have had much influence in shap- 
ing modern doctrines of political economy, T. E. Malthus, A.M., 
who wrote in 1803, holds prominent place. The following quo- 
tations from his writings indicate their tenor : 

" The increase of population is necessarily limited by the 
means of subsistence. 

" Population invariably increases when the means of subsist- 
ence increases, unless prevented by powerful and obvious 
checks. These checks, and the checks which keep population 
down to the level of means of subsistence, are moral restraint, 
vice, and misery. It has appeared from the inevitable laws of 



THE DISTRIBUTION OF WEALTH. 309 

humaa nature some human beings will be exposed to want. 
These are the unhappy persons who, in the great lottery of life, 
have drawn a blank." 

He quotes approvingly Arthur Young, as follows : " If you 
would see a district with as little distress as is consistent with 
the j)olitical system of the old government of France, you must 
assuredly go where there are no little proprietors at all. You 
must visit the great farms in Beauce, Picardy, part of Nor- 
mandy, and Artois, and there you will find no more population 
than what is regularly employed and regularly paid ; and if in 
such districts you should, contrary to the rule, meet with much 
distress, it is twenty to one but that it is in a parish which has 
some commons, which tempt the poor to have cattle, to have 
property, in consequence misery. When you are engaged in 
this political tour, finish by seeing England, and I will show you 
a set of peasants well clothed, well nourished, tolerably drunken 
from superfluity, well lodged and at their ease ; and yet among 
them not one in a thousand has either land or cattle." 

Malthus, continuing, says, " The specific cause of the poverty 
and misery of the lower classes of people in France and Ireland 
is that by the extreme subdivision of the property in the one 
country, and the facility of obtaining a cabin and potatoes in the 
other, a population is brought into existence which is not de- 
manded by the quantity of capital and employment in the country. 
And the consequence of which must necessarily, therefore, be 
... to lower in general the price of labor by too great com- 
petition, from which must result complete indigence to those 
who cannot find employment, and incomplete subsistence even 
to those who can. 

"The desirable thing, with a view to the happiness of the 
common people, seemed to be that their habitual food should be 
dear, and their wages regulated by it ; but that in scarcity or 
other occasional distress, the cheaper food should be readily and 
cheerfully adopted." 

The idea that the poverty of the Irish people is caused by the 
facility for g-etting cabins and potatoes, rather than by the want 
of facility for getting anything better, has the genuine ring of 
classically orthodox political economy. 



310 THE DISTEIBUTION OF WEALTH. 



CHAPTEE XL 

LIMITATIONS ON PROFITS — REMEDIES FOR LOW WAGES — WHAT MAKES 
THE RATE OF WAGES. 

The profits of capital in the same field of competition, whether 
invested in one industry or many, tend to a common level. 
Capital always seeks that form of investment affording the 
largest returns with the least risk of loss ; and, when readily 
convertible into money, it flows from one industry to another 
until an equilibrium is attained. Such is the universal ten- 
dency, checked and restrained by the constant operation of 
hindering causes. This general tendency is well understood, 
and requires no comment. The obstructing conditions or causes 
arise out of the fact that capital invested in certain forms, as 
shops, mills, furnaces, and lands, cannot be withdrawn and di- 
verted to other j)urposes, and from the immobility of labor. It 
hence results that the profits of different industries greatly 
vary, and that through long periods of time. 

But the question to which, in this connection, I desire to 
direct special attention is, What are the principles that deter- 
mine the relative shares of capital and labor, of the product of 
labor ; what are the economic forces, by the operation of which 
capital is enabled to say, " So much is mine, and so much I leave 
to you"? Wages, we are told, are the remainder after the share 
of capital has been taken out ; the residue after capital has 
drunk his fill; the cold meats for the waiters after the banquet 
is over. " Wages," says Atkinson, " therefore, are apparently 
deferred to profits; but, on the other hand, wages constitute all 
that there is lefty It is not my purpose to question this view. 
It correctly expresses the existing relation between capital and 
labor. But why the relation of dependence implied in this form 
of statement? 

Again, it is an accepted dogma of political economy, until 
recently rarely questioned, that the rate of wages is determined 
by the relative amount of capital, which constitutes the fund 
from which wages must be drawn. I do not quote this doctrine 



THE DISTEIBUTION OF WEALTH. 311 

to sanction it, but to show the utter dependence of labor upon 
capital according to the views entertained by standard author- 
ities upon the subject of political economy. According to this 
view the wages of labor, and therefore the profits of capital, 
which are the correlative of wages, are determined by condi- 
tions over which the laborer exercises no control. Current and 
generally accepted dogmas of political economy appear to regard 
the worker merely as an inanimate factor, whose wishes and 
whose necessities do not at all enter into the problem. I do not 
claim that such conclusion has been announced or formulated, 
but only that it is the logical sequence of doctrines embodied in 
the orthodox code of economic science. 

This merely illustrates what every one familiar with standard 
authors must have observed, that writers upon political econ- 
omy have been accustomed to view the subject from the stand- 
point of the interest of capital rather than that of the interest 
of labor, and that the policies of the past have been shaped 
without due consideration of the rights and interests of the 
working-people. 

It is true, in a measure, that these writers have treated facts 
as they found them, and estimated social forces as they existed j 
but it is also true that they have persistently overlooked the 
open way through which imprisoned humanity might escape 
from the bondage of perpetual poverty. 

Much ingenuity has been wasted in shaping idle theories that 
explain no phenomenon of economic science, and contribute 
nothing to the store of useful information. Belonging to this 
class of unprofitable speculation is what is known as Eicardo's law 
of rent, the formal declaration of which may be found in every 
standard work on political economy. But, until Henry George 
put it into the foundation of his peculiar doctrine regarding 
land, it was without value, except as an a priori spring-board 
to assist learned professors in feats of intellectual gymnastics. 

The " doctrine," as by conventional courtesy it is called, is 
formulated, in the words of John Stuart Mill, as follows : 
" The rent which any land will yield is the excess of its produce 
beyond what would be returned to the same capital if employed 
on the worst land in cultivation." Mr. Mill devotes several 
pages to its elucidation. The proposition is true enough as a 



312 THE DISTEIBUTION OF WEALTH. 

statement of abstract principle applicable to assumed conditions, 
being merely an indirect statement of the well-understood and 
universally-observed fact, that the productiveness of land is the 
measure of its value. Land that will produce no more than the 
amount requisite to pay for the labor and capital required in 
production is worth nothing, since it contributes nothing beyond 
cost of cultivation; and just in proportion as the product in- 
creases beyond that point, and there is a margin above cost of 
cultivation, land possesses commercial value. But no principle 
is here elucidated ; there is no contribution to political science, — 
merely a commonplace fact in uniform, taken for a law, on the 
same principle that small boys are liable to mistake drum-majors 
for generals. 

In comment, Mill says, " This is the theory of rent, first pro- 
pounded at the end of the last century by Dr. Anderson, and 
which, neglected at the time, was almost simultaneously redis- 
covered, twenty years later, by Sir Edward West, Mr. Malthus, 
and Mr. Ricardo. It is one of the cardinal doctrines of political 
economy ; and, until it was understood, no consistent explana- 
tion could be given of many of the more complicated industrial 
phenomena." 

This " doctrine" may have been unknown to scientists, and 
may have been discovered, as Mill says, by West, Malthus, and 
Eicardo. l^fevertheless, landlords and tenants had known it all 
the while, only they did not know a name for it. 

If some industrious far-fetched individual should chance to in- 
vent an elaborate and ingenious formula, in which the little fact 
that two plus two are four could be wrapped so as to require 
considerable mental eifort at each undoing, he would incur great 
risk of being embalmed by fame as the discoverer of a new 
principle in addition. 

The total product of a country may be said to be divided into 
two parts: one part, being the share of labor, represents the 
wages or earnings of workers ; the other part, being the share 
of capital, represents the amount appropriated by the owners 
of capital, as their compensation for its use. But who decides, 
and how is it determined, where the dividing line shall be 
drawn ? Is there any rule of right and wrong, or any economic 
law, by which this division is determined ? 



THE DISTEIBUTION OF WEALTH. 3l3 

Should fifty pounds of mea^ be tossed to two lions, it would 
be impossible to determine by a priori reasoning ju^t how much 
of that meat each lion would get. The factors in the problem 
would be the quantity of meat, the relative appetites of the two 
beasts, the strength of their respective jaws, the length and 
sharpness of their claws, and the relative fierceness of their dis- 
positions. He who should attempt to determine the result of 
the competition by estimating these factors might be regarded 
as proceeding according to scientific methods ; but if a reliable 
answer be desired, the only way is to wait and see the animals 
eat. This we have done In the chapter on " Production and 
Distribution." 

We have observed that the lion Capital gets the larget share ; 
while Labor growls and shows his teeth. Capital eats the meat. 
Capital is a valuable lion, and we cannot afford to slay him; 
and if we could but trim his claws or file his teeth, and in this 
manner compel him to observe the golden rule and do unto 
others as he would have others do unto him, he might become a 
most exemplary lion. But the veterinary chiropodistr and den- 
tist possessing the requisite strength and skill to perform this 
service has not yet come forward ; nor is he to be looked for in 
the form of a professor of the orthodox school of political 
economy. 

To generalize the truth which I have sought to illustrate, I 
may say that the division of the product, which constitutes the 
sum of the wages of labor and the profits of capital, between 
the workers and the owners of capital, into wages and profits, 
is the combined effect of two opposing and ever-varying forces, 
which spring out of changing social and industrial conditions, 
and which cannot be measured, except in their results, as mani- 
fested in the division which actually takes place. Neither wages 
nor profits can be ascertained by rule ;" nor may they be fixed 
by legislative law, except in so far as the conditions by which 
they are determined may be slowly modified by the effects of 
legislation, or economic forces may be restrained from produc- 
ing their ordinary results by the limitations of law. The only 
exception to this general proposition that need be noted, and 
that is an apparent rather than a real exception, is in the case 
of natural monopolies, where by law charges may be limited 



314 THE DISTEIBTJTION OF WEALTH. 

below a maximum rate, and limitations on rates of interest, 
which rest upon special grounds, and do not fall within the 
reason of the general rule. 

It is a habit of writers on economic science to assert with loud 
emphasis that there is no conflict between capital and labor. 
The most ignorant working-man knows better. He may not 
comprehend the precise nature of the conflict, nor be able to 
see where it begins or where it ends ; but that there is a con- 
flict, in which he is continually worsted, he knows full well. 
He knows that every stone in the palaces of the rich was lifted 
and laid in place by the hands of working-men. He knows that 
the dwellings of the poor, for which they pay monthly tribute 
to capital in name of rent, are the product of labor. He knows 
that silks and satins and gauzy laces, that lend enchantment to 
the beauty of fine ladies, are not gathered from trees, but are 
the products of ill-requited toil ; and why attempt to deceive 
him ? The day has gone by when gross public wrongs may be 
successfully defended by denying the existence of facts that lie 
clearly exposed to the view of whoever may choose to look. 
There is a conflict between capital and labor; and it is the duty 
of the political economist to define its nature and character, 
that society may be protected against the growth of doctrines 
that may endanger social order. 

In production the interests of capital and labor are combined, 
they are mutual ; but in the division of the joint product into 
wages and profits, terms which describe the respective shares 
of the worker and the owner of capital, these interests become 
two antagonistic forces ; and the owners of capital and the 
workers contend in opposition, each for the larger share of the 
same thing. 

The tendency of capital is, therefore, to force wages down to 
the " minimum fixed by what is called the standard of comfort, 
— that is, the amount of necessaries and comforts which habit 
leads the working-classes to demand as the lowest on which they 
will consent to live." While the tendency of the opposing force, 
the interests of the workers, is to force the profits of capital 
down to the minimum which the owners of capital will consent 
to accept as necessary to maintain them in the style of living 
prescribed for them by custom or fashion and social ambition, 



THE DISTRIBTJTION OF WEALTH. 315 

or to augment their fortunes by accumulations of additional 
wealth. 

LIMITATIONS ON PROFITS. 

As I have already said, we cannot measure these forces, ex- 
cept by their results. Their character, being inherent in the 
nature of things, may not be altered by the force of legal enact- 
ments. But there are certain limitations upon their operation 
to which I desire to call attention. These limitations are, first, 
natural limitations ; second, limitations imposed by law. 

First, as to natural limitations. 

Tine total product may be regarded as divided into two parts, 
the first part consisting of perishable products, such as food and 
clothing, which, being of such a nature as to require that they 
be consumed within the limits of a short period, the amount of 
wealth which can be saved or stored in this form is limited by 
the amount of the product which may be on hand at any one 
time ; the other part, consisting of durable products, such as 
machinery, houses, furniture, horses, carriages, paintings, statu- 
ary, and other form of property that endures through a con- 
siderable period of time. The two classes, it will be observed, 
merge into each other. What are designated as the savings 
of labor, or the savings of capital from year to year, must take, 
the form of durable property. There may be a temporary saving 
in the form of perishable property, subject to the necessary limi- 
tation, both as to amount and period of duration. Being so 
limited, the perishable product is not usually embraced within 
the meaning of the term savings, as employed in the discussion 
of the subject of wealth. 

The total product, including both that which may be classed 
as perishable and that which may be termed durable, is limited 
by the total demand of consumption, as well as by the capacity 
of labor to create. 

The total profits of capital are represented by that portion of 
the total product set apart to the credit of the owners of capital, 
and which must consist of either perishable or durable property 
or of both. The portion of profits which is paid in the form 
of perishable products is limited to the amount of food and 
clothing and things of like character which the owners of 
capital and their families can directly consume, and which they 



316 THE DISTRIBUTION OF WEALTH. 

may indirectly consume in the form of personal or professional 
service, such as the services of domestics and coachmen in 
livery, brass bands, theatrical players, ministers and mission- 
aries, music-teachers and dancing-masters, and so on through 
the list of occupations classed under the head of personal and 
professional service. It will be seen that the amount of perish- 
able products which the owners of capital may consume, though 
large, is necessarily limited. 

The amount of durable property, in the form of dwellings, 
horses, carriages, paintings, statuary, and the like, which the 
owners of capital can appropriate to their own use, or which 
they may indirectly employ through the personal and profes- 
sional service classes, has like limitations. The boundaries are 
still farther out; and, under the pressure of improved tastes, 
vanity, or love of luxury, keep expanding, limited only by the 
reach of human desire. But when, at any time, the supf)ly 
of durable property has approximated somewhat closely the 
amount required • to satisfy the more reasonable demand, prop- 
erty of that character increases but slowly ,* since people of 
wealth do not readily abandon or pull down good houses, that 
come near the measure of their desires, in order to build better 
ones ; they do not discard the old paintings to make room on 
the wall for new. Conditions become fixed ; a stationary point 
is reached ; and the demand for new buildings travels but little 
in advance of the increase of population. 

The other forms of durable property which absorb the in- 
vestments of the profits of capital embrace railways, ships, 
factories, tools, and other revenue-bearing property, including 
houses to rent. This form of property has its limitations in the 
demand, which grows but slowly from year to year. In Eng- 
land, and also in this country, the demand for this class of 
property is already well supplied. 

There is not room for the expenditure of a great amount of 
constructive labor in any one year, in creating durable revenue- 
bearing property. The supply is apace with the growth of 
population. We cannot keep on at the old speed, building 
factories and mills and railroads ; and, in consequence, that part 
of the product which we call savings, and which represents the 
increase of wealth from year to year, must fall off. 



THE DISTRIBUTION OF WEAIiTH. 317 

The principal effect of the conditions now reached is a reduc- 
tion of the savings of capital ; and the savings of capital being 
a part, and the greater part, of the profits of capital, the profits 
of capital must fall. The savings of labor will suffer less, since 
labor saved but little hitherto, and, since something cannot 
be taken from nothing, the quotient will not suffer violent 
diminution. 

But capital has one other resource, the folly of farmers. By 
loaning their surplus capital on farms, capitalists bring about 
this result : at the end of a year, or, say, a period of five years, 
the farmers have consumed in food, clothing, or investment in 
stock or buildings a larger share of the total product than that 
which is represented by their own labor during the same period, 
or, if the same amount, at prices maintained on a higher scale 
as to manufactured products, and on a lower scale as to agri- 
cultural products, and the profits of capital have been kept up. 
Except for this, and other like fields of investment, profits of 
capital and rates of interest would have gone down from the 
effects of natural causes. In England, and in all old communi- 
ties which have reached a state of completed development, rates 
of interest go down, because the margin of savings is reduced, 
and would go much lower, except that they are kept up by 
investments in credits in other countries or other sections of 
the same country, where a fixed status has not yet been reached 
and there is more rapid increase of durable wealth. English 
capital confined on English soil would not command a rate of 
interest above two and a half or three per cent., and I believe 
not above two per cent., and ]^ew England capital would subsist 
on lean profits, except for the rapidly-developing West. 

But, while the interest and profits go down, as the margin of 
savings narrows, it is because of the fact that the margin of 
savings grows small that profits do go down, and the oppor- 
tunity of labor to save disappears at the same time. A low 
rate of interest indicates low wages, though it does not cause 
low wages. When two horses in the same pasture grow lean at 
the same time, we do not infer that one is lean because the other 
is, but that both are poor because the pasture is short. This is 
a distinction which some writers on political economy have not 
always observed. 



318 THE DISTEIBTJTION OF WEAJLTH. 

Adam Smith apparently entertained the opinion that reduc- 
tion in profits of capital is to be attributed to the competition 
of capital growing out of its increase. John Stuart Mill does 
not fall into this error, but offers the explanation of Mr. Wake- 
field, which is as follows : " On a limited extent of land only a 
limited quantity of capital can find employment at a profit. As 
the quantity of capital approaches this limit, profit falls ; when 
the limit is attained, profit is annihilated, and can only be 
restored through an extension of the field of employment." 
While the explanation embraces a general fact, it is founded on 
reasoning that is unsound, and leads to the false inference, that 
the tendency to lower profits finds its entire, or even its princi- 
pal, explanation in the limitations of agriculture. The true 
explanation must be found in the limitations of wealth. 

It has already been stated that credits constitute an outlet for 
the savings of capital. The volume of credits, however, has its 
limitations in the fact that they may not exceed a certain 
relative ratio to the property of the country. 

It will be seen, therefore, that the natural limitations on 
profits are, in part, the same as the limitations on wealth ; and 
that, except for the agency of credits, the margin of profits 
would tend rapidly to the minimum, which would represent the 
annual consumption by capitalists of perishable products, and 
the maintenance and annual increase of durable property 
directly owned by capitalists. Limitations on the rate of 
interest, or limitations on the amount of real estate which may 
be owned by any one person, will operate as a limitation on 
profits, and will have the effect to increase wages as compared 
with profits. 

My purpose in pointing out these limitations on profits is to 
lead the way to some avenue through which it may be prac- 
ticable to reach excessive profits by means of effective legislative 
limitations, general in character, pi^ctical in operation, and free 
from the objection of a tendency to hinder production. 

The first measure that suggests itself as fully complying with 
these conditions is a low limit on the rate of interest. The 
effect that would follow would be to take from capital the power 
to absorb that portion of the product which is represented by 
interest accumulations effected by the present excess of the rate 



THE DISTRIBUTION OF WEALTH. 319 

of interest over the rate that might be fixed. Should the rate 
be fixed at three per cent., the annual share of the product set 
apart to the credit of capital would be reduced in the amount 
of about three hundred million dollars, which sum, deducted 
from the profits of capital, would go to the credit of wages, and 
the wages of each worker would be proportionally- increased. 
But, since the tendency of the rate of profit on capital, in all 
forms of investment, is towards a common level, a reduction in 
the rate of interest would be followed by a corresponding reduc- 
tion in rents of dwellings and other forms of profits ; and the 
indirect effect of lowering the rate of interest would be as great 
as the direct effect ; and the portion of the annual product 
which would be thereby withdrawn from profits and added to 
wages would not be less than six hundred millions of dollars, or 
an increase of thirty dollars to each worker. 

The immediate effect of thus impairing the value, by limiting 
the absorbing power, of credits would be an attempt on the part 
of capitalists to convert a large portion of credits into real 
estate; and agricultural lands would be in demand as a safe 
form of investment, not subject to the full force of restrictions 
on profits of capital otherwise invested, for the reason that land, 
being limited in area, the profits of agriculture are forced up by 
the demand for food, the supply of which is confined within 
bounds that may be extended only by improved methods of 
agriculture, and that gradually, and within limits unalterably 
fixed by physical laws. . It would, therefore, be advisable, if not 
necessary, to limit the amount of land which any one person 
may own. This latter limitation would have its direct effect 
upon the limitation of profits of capital, and is to be commended 
as an independent measure ; but, in conjunction with the reduc- 
tion of the rate of interest, it would be an essential part of a 
successful scheme to restrain the omnivorous propensities of 
'capital, and secure to labor, in the form of increased wages, a 
larger share of the total annual product. 

I name a particular rate of interest in this connection only as 
a matter of convenience in illustration. The rate that ought to 
be adopted should be a matter of independent consideration. 

No other limitations of general character would be required. 
There are some special limitations to be hereafter considered. 



320 THE DISTEIBUTION OF WEALTH. 

The objections to the scheme here suggested are embraced in 
the following propositions : 

First, capital would be deprived of its equitable share of 
profits. 

Second, production would fall off, because capital would be 
withdrawn. 

Third, a low rate of profit would not induce people to save. 

I am able to conceive of no objection which might be urged 
other than those here stated. 

To the first objection, the other chapters of this book furnish 
such answer as I have to make. 

As to the second, how can railways be withdrawn ? how can 
factories, mills, and tools be withdrawn ? If credits are with- 
drawn, the amount must be invested in other industries, — in 
other words, in production, under direct control of the owners of 
capital. The only way capital can be withdrawn from an industry 
is to transfer it from one industry or subject-matter to another. 
It may take the form of credits ; but credits represent capital 
invested in tangible property. When one industry is depressed, 
or is relatively unprofitable, capital may be withdrawn to an- 
other industry, but it cannot be withdrawn into the air; a 
withdrawal of capital means a transfer of capital to another 
form of investment. A measure which affects aU industries 
alike can have no tendency to drive capital from one industry 
to another. If any one should imagine that capitalists might 
convert the thirty or thirty-five billions of productive capital in 
this country into money, and lock it up in the banks, it is only 
necessary to remember that the total amount of money in the 
United States is only $1,405,018,000. 

If the profits of capital were less, capitalists, who cannot 
escape the expenses of living, would be under the necessity of 
keeping their capital still more actively employed that their 
incomes might be increased. 

As to the third objection,— it is the objection urged by writers 
on political economy, — John Stuart Mill says, "There would be 
adequate motives for a certain amount of saving, even if capital 
yielded no profit. There would be an inducement to lay by in 
good times a provision for bad; to reserve something for sick- 
ness and infirmity, or as a means of leisure and independence in 



THE DISTRIBUTION OF WEALTH. 321 

the latter part of life, or a help to children in the outset of it. 
Savings, however, which have only these ends in view have not 
much tendency to increase the amount of capital permanently 
in existence. These motives only prompt persons to save at 
one period of life what they propose to consume at another, or 
what will be consumed by their children before they can com- 
pletely provide for themselves. The savings by which an addi- 
tion is made to the national capital usually emanate from the 
desire of persons to improve what is termed their condition in 
life, or to make provisions for children and others independent 
of their exertions. Now, to the strength of these inclinations, 
it makes a very material difference how much of the desired 
object can be effected by a given amount and duration of self- 
denial ; which again depends on the rate of jirofit. And there 
is in every country some rate of profit below which persons in 
general will not find sufficient motive to save for the mere pur- 
pose of growing richer, or of leaving others better off than 
themselves. Any accumulation, therefore, by which the general 
capital is increased requires, as its necessary condition, a cer- 
tain rate of profit ; a rate which an average person will deem to 
be an equivalent for abstinence, with the addition of a sufficient 
insurance against risk. There are always some persons in whom 
the effective desire of accumulation is above the average, and 
to whom less than this rate of profit is a sufficient inducement 
to save ; but these merely step into the place of others whose 
taste for expense and indulgence is beyond the average, and 
who, instead of saving, perhaps, even dissipate what they have 
received." 

Further on he says, "A profit or interest of three or four 
per cent, is as sufficient a motive to the increase of capital in 
England at the present day as thirty or forty per cent, in the 
Burmese empire, or in England at the time of King John. In 
Holland, during the last century, a return of two per cent, on 
government security was consistent with an undiminished, if 
not with an increasing, capital." 

In a work recently published, entitled " Premises of Political 
Economy," by Patten, I find the following enigmatic declara- 
tion: "Both a high rate of interest and high wages are 
necessary to preserve a high standard of life, and any plan of 

21 



322 THE DISTEIBUTION OF WEALTH. 

social improvement whicli would secure a high rate of wages by 
lowering interest is defective. A reduction of the rate of inter- 
est can only be accomplished by such a diminution of the in- 
ducement to save as will cause all capital to be concentrated in 
the hands of a few persons. A class of laborers who do not save 
for themselves will always be so deficient in intelligence as to 
lack those qualities necessary to maintain high wages, and they 
will necessarily sink to as low a social level as the surrounding 
natural conditions will allow. What is needed is that every 
one be required to do his part, and that each should obtain the 
whole reward which nature gives for labor and abstinence. So 
long as interest is low, and cheap labor is allowed to compete 
with skilled labor, the benefit of low interest does not come to 
the laborers, nor that of cheap labor to the capitalist ; but the 
loss of both classes goes to the landlords, who reap all the bene- 
fits of low interes't and cheap labor, no one receiving the whole 
of that reward which nature offers to those who save and those 
who labor. If intelligent laborers, who would save, had only to 
compete with the ignorant, who would not, the former could 
win in the contest everywhere ; it is only when the latter are 
reinforced by low interest that they obtain the victory." 

The evidence that this is a bit of German metaphysics, with 
lucid intervals, does not need the corroborating testimony of the 
dedication of the book, from which we learn that Mr. Patten 
was a student of Dr. Johannes Conrad in the university at 
Halle. German metaphysics is the art of mounting common 
ideas in stained-glass cases, and exhibiting them by moonlight. 

What Mr. Patten seems to say, in the first sentences of the 
quotation, in which he declares for both high wages and a high 
rate of interest, is that the yard of product should be cut into 
two large pieces, so as to give three-quarters of a yard to the 
laborer for his wages, and one-half a yard to the capitalist for 
his profits ; but I am disposed to acquit the author of an in- 
tention to make such violent assault on an inoffensive rule of 
division. What he means to say is, I presume, that if the price 
of manufactured products is relatively reduced, the price of 
agricultural products will remain relatively high. Since the 
• landlords have a monopoly in the ownership of land, the 
agricultural product is a limited quantity, and therefore the 



THE DISTRIBUTION OF WEALTH. 323 

bcDsfit of low prices in manufactured products will accrue to 
the owners of land, for the reason that they will be able to pur- 
chase a greater quantity with the same quantity of their own 
products. So stated, it is an argument in favor of applying 
legislative limitations to the ownership of land, the force of 
which I admit. But the theory that capitalists should continue 
to rob labor by means of excessive profits on capital, since if 
they do not do so the landlords will, is the political economy of 
freebooters and pirates. 

The position of Mill, plainly stated, is that if people who save 
a part of their own earnings cannot, by the device of interest 
or profits, acquire a part of the earnings of other people, they 
will not have the necessary encouragement to save at all, except 
to meet the pressing necessities of sickness and age, and the 
support of helpless children. But, if people generally were to 
save so much, the aggregate savings of the country would not 
be less than they now are. Mr. Mill appears to overlook the 
important fact that increasing the power of capitalists to save 
diminishes, in like ratio, the power of laborers to save. Only 
so much of the total product may be saved ; the more capital 
gets the less labor retains. That it is important that there 
should exist inducement to save must be admitted. But who 
most needs encouragement, the capitalist or the working-man ? 
Is it he who is beginning, and who is without money to loan, 
or capital to invest, or a house to live in, who needs aid and 
encouragement in his effort to save, or he who has houses and 
lands and money to loan ? The question is, Shall the policy of 
the law be such as to place in the way of labor the opportunity 
to save its own earnings, or to give to capital the power of 
absorbing them ? 

The chief difficulties to be overcome in the way of saving 
lie at the beginning; it is the struggling poor who need the 
encouragement of better wages. Lower rates of interest, lower 
profits, make it easier for the working-man to save, and the best 
encouragement that can be given is opportunity. 

Accumulations of capital are discouraged by the disorganized 
conditions of society, prevalent in semicivilized countries, 
which take away the protection of law, and expose property to 
the dangers of robbery or confiscation ; but I know of no in- 



324 THE DISTRIBUTION OF WEALTH. 

stance in modern history, in a civilized community, where prop- 
erty is secure, of the development of a disposition on the part of 
the owners of capital to consume their whole income, and cease 
to save, because they could not save rapidly. On the other 
hand, I believe the statement will be borne out by general ob- 
servation that the disposition of the wealthier classes in the 
direction of economy and providence grows as their incomes 
diminish. The popular idea, embodied in the vulgar proverb, 
" Come easy, go easy," expresses a truth of economic science that 
eminent authors seem to have overlooked. 

But Mr. Mill answers his own argument by citing the case of 
Holland, where he says that, " during the last century, a return 
of two per cent, on government security was consistent with an 
undiminished, if not with an increasing, capital." The theory that 
a high rate of interest is necessary in order to induce people to 
save rests wholly on a 'priori assumption. It has not been verified 
by the history of any people, and has seldom been put to the 
test of experience. It is merely the formula for the defence of 
existing conditions which it is to the interest of a class to 
maintain. It is quite to be expected that writers on the subject 
of political economy should assume that the industrial condi- 
tions by which they are surrounded, and which prevail through- 
out all nations, rest on sound principles of economic science. 
Slavery, serfdom, feudalism in their day prevailed. They were 
condemned when the march of civilization had left them behind. 
Civilization continues, as it has done throughout the ages, to 
present the spectacle of the masses of mankind slowly strug- 
gling upward, nearer and nearer, to the level on which stand the 
more favored classes of society. Every proposed advance is 
condemned beforehand and applauded afterwards. Orthodox 
maxims of political economy may keep them in line, but cannot 
long retard their advance. Patiently, slowly, and steadily they 
move forward, hindered and delayed sometimes by an army of 
conventional ideas and doctrines intrenched behind statutes and 
constitutions and venerable customs ; but they never surrender 
nor turn back. 

As to other limitations : The pressure of the interest of the 
owners of capital, in the direction of constantly-diminishing 
wages to the working-man, is met by resisting tendencies 



THE DISTEIBUTION OF WEALTH. 325 

springing out of the desires and the interests of the working- 
classes, aided by education, custom, and the common instincts of 
justice, which assert themselves with increased vigor as they 
gather strength from improved social and moral conditions. 
The maxim, that wages are regulated by the law of supply and 
demand, is subject to many qualifications and partial exceptions, 
which may, perhaps, be considered as embraced within the rule 
when liberally interpreted, but do not lie within the scope of 
its direct meaning. 

For instance, the supply of carpenters, painters, masons, and 
other artisans is, on the average, in excess of the demand. This 
excess is, perhaps, proportionately as great as that of the 
number of domestic servants in excess of the demand for the 
service of persons of that class ; and yet wages of artisans are, 
in general, three or four times as high. To say that the services 
of the latter are three times as valuable as the former is only 
another form of saying that they bring three times as much in 
the market. The true reason will be found in the higher 
average intelligence and consequent superior social position of 
artisans as a class, and in the independence and self-assertion 
growing out of these conditions, as well as the general recogni- 
tion of the claims of superior industrial skill to more than an 
average share of the rewards of labor. 

Wages in the lower forms of industry will always be rela- 
tively low ; the result of the competition of the ignorant, the 
dependent, and that large class of persons whose coarser physi- 
cal needs constitute the measure of their dem"ands. Illustrations 
of this truth may be found on every hand ; and in special illus- 
tration the low intellectual condition, and the correspondingly 
low wages, of the common laborers in the Southern States of 
the Union may be cited. The wages of those engaged in agri- 
culture in Greorgia, North Carolina, South Carolina, Alabama, 
and Mississippi, during a series of years, average not more than 
one-half the wages of the same class of laborers in the New 
England States. 

The education of the masses must be recognized as one of the 
m.ost effective remedies for low wages. 



326 THE DISTBIBUTION OF WEALTH. 



LABOR COMBINATIONS AND STRIKES. 

The demands of workers for higher wages, everywhere opera- 
tive, and in a measure effective, if not to secure an advance, at 
least to retard reduction, often take on the form of violent 
assertion in strikes. That labor strikes are, in a measure, 
effective is shown by carefully-collected statistics. 

In Illinois, during the years from 1881 to 1886, inclusive, there 
were 1805 strikes, or 65.2 per cent, of the whole number of 
strikes during that period, whose object was to secure an in- 
crease of wages. Of these, 1215, or 67.3 per cent., are recorded 
as successful. There were 580 strikes for the reduction of the 
hours of labor ; of these, 167, or 29 per cent., succeeded. The 
success of strikes in Illinois is a fair average of the success of 
strikes throughout the country during the same period, 66 per 
cent, of which were successful. The success of these strikes is 
not the full measure of the power of organization to maintain 
wages. The mere fact of organization stands in the way of 
reduction, and often compels an increase without resort to 
extreme measures. 

The loss of wages sustained by the seventeen thousand nine 
hundred and twenty-two j)ersons who engaged in the successful 
strikes amounted to $286,472, and the gain was an average in- 
crease of twenty-six cents per day. In the partially-successful 
strikes, involving three thousand three hundred and three men, 
there was an aggregate wage-loss of $125,674. In the range of 
the United States, in successful and partially-successful strikes, 
involving two hundred and two thousand eight hundred and 
eight workers, the direct wage-loss was $5,921,151. This estimate 
does not include losses from unsuccessful strikes, idle machinery, 
or indirect losses. While it will be seen that labor organizations 
and strikes may not be without value as a remedy for low wages, 
they constitute an unsatisfactory and expensive remedy. 

When wages are advanced by measures of this character, 
capital maintains its margin of profit by demanding higher 
prices for products, and, in the end, the burden of the increase 
of wages in one industry is borne by the workers at large in the 
form of higher prices for the commodities which they consume. 
Labor only shifts his load on to the other shoulder. These 



THE DISTRIBUTION OF WEALTH. 327 

organized efforts for the advance of wages do, in the end, no 
doubt result, in some degree, in lowering the margin of profits ; 
but they are, in the main, but long-range contests between 
different classes of labor, in which unorganized labor, being at 
the greatest disadvantage, suffers the loss of what is gained by 
other classes. The Knight of Labor gets a more generous allow- 
ance, but Hodge goes hungr3\ 

The total amount of wages falls within fixed limits. An 
increase of wages in all departments of industry means simply 
an increase in the prices of the products of all industries, and 
nothing is gained except that product-s at a high price go further 
in the discharge of existing debts. An increase of wages in one 
industry advances the price of the products of that industry to 
the people in general, to the advantage of a class of workers. 

Let us assume that the total product is equivalent to 100, and 
that of this product eighty per cent, goes to labor and twenty 
per cent, to capital ; that the share of labor is divided as follows : 
twenty per cent, to agricultural workers, twenty per cent, to 
workers in manufacturing industries, twenty per cent, to me- 
chanics, miners, clerks, railway employes, etc. ; ten per cent, to 
day laborers, and ten per cent, to personal service and profes- 
sional classes, l^ow, suppose that the wages of agricultural 
workers be increased, so that they shall receive thirty per cent, 
of the entire product, from what source will this additional ten 
per cent, be drawn? A very small proportion, if any, will be 
drawn from the share of capital. The owners of capital will 
pay more for meat and flour, but prices of commodities handled 
by capital will be advanced, and rents and interest will rise. 
The great body of working-people will pay more for the products 
of agriculture, and, though their wages may remain as before, 
by reason of higher prices for what they buy their shares 
of the total product will be reduced, so that the ratio will stand : 

Per cent. 

Agricultural workers o 30.00 

Manufacturing " 16.33 

Mechanics, etc., " 16.33 

Personal service classes 8.66 

Day laborers 8.66 

Capital 20.00 

Total • • 100.00 



328 THE DISTRIBUTION OF WEALTH. 

If the wages of workers in manufacturing industries be in- 
creased in like projDortion, the wages of other classes remaining 

the same, the ratio will stand : 

Per cent. 

Agricultural workers 16.33 

Manufacturing " 30.00 

MecTianics, etc., " 16.33 

Personal service classes 8.66 

Day laborers 8.66 

Capital 20.00 

Total 100.00 

The changes in ratio would not correspond with any definite 
mathematical exhibit which can be made, for the reason that 
the consumption of different classes is affected in different de- 
grees by a rise or fall in prices. The problem is a complex one. 
I have merely sought to illustrate a governing principle in the 
division of the total product among different classes of workers, 
and to show the effect of an increase in wages of one class of 
workers upon the wages of other classes. 

If we increase the money wages of all classes of workers by 

an addition of twenty per cent., the result as compared with 

former wages will be as foUows : 

Per cent. 

Agricultural workers 24.00 

Manufacturing " 24.00 

Mechanics, etc., " 24.00 

Personal service classes , 12.00 

Day laborers 12.00 

Capital 24.00 

Total 120.00 

An increase in wages without increase of quantity of product 
means a corresponding increase of prices. The total product, 
measured in money, would be increased in like ratio, and the 
relative share of caj)ital would remain the same. The total 
product, though not changed in quantity, measured in money, 
instead of remaining at 100, would then be represented by 120. 

The only advantage gained by labor would be that existing 
credits, as measured by the value of commodities, would depre- 
ciate, and what was 100 before the rise would be 83-|- after the 



THE DISTRIBUTION OF WEALTH. 329 

rise, since one hundred dollars would purchase only 83^ per 
cent, of the product which it would have purchased before the 
advance in prices. 

Let us examine further the effects of an advance in wages of 
a class of workers. Take for illustration the artisans in the 
building trades. If the wages of carpenters and masons be in- 
creased there will be less building, and a smaller number of 
families of limited means will be able to secure homes of their 
own, and rents will be maintained or advanced to the ad- 
vantage of capital, and building being restricted, artisans them- 
selves, while securing higher wages for the work they do, will 
do less work, the total product will be correspondingly 
diminished, and the share of the workers, as a whole, will be 
less. 

What is required is not an increase in the rate of wages of 
any class of workers whose wages are already relatively as high 
as the wages of other classes, but the adjustment to a fair and 
equitable standard of wages, interest, rents, and profits in trade. 

When wages are so adjusted that, in the various occupations, 
they are relatively equitable and just, an increase of the wages 
of one class of workers is secured chiefly at the expense of 
other classes ; capital takes care of itself. 

In these wage-contests the classes who suffer most are the 
agricultural classes, day laborers, and workers in those indus- 
tries where special skill is not required, and where the number 
seeking employment is greater than the demand. 

As an organized force capital is far more effective than labor. 
While the workers are numbered by the million, capitalists are 
counted only by hundreds or thousands. Large amounts of 
capital owned by many individuals are employed under the 
management of a single representative or a board of directors ; 
interests are readily combined. An intelligent understanding 
of mutual interests enables a small number of capitalists oper- 
ating together to maintain their profits against the disconcerted 
efforts of large numbers of workers to whom effective organiza- 
tion is impracticable. 

Adam Smith, writing upon this subject, says, "We rarely 
hear, it has been said, of the combinations of masters, though 
frequently of those of workmen. But whoever imagines upon 



330 THE DISTEIBUTION OF WEALTH. 

this account that masters rarely combine, is as ignorant of the 
world as of the subject. Masters are always and everywhere 
in a sort of tacit, but constant and uniform, combination not to 
raise the wages of labor above their actual rate. To violate 
this combination is everywhere a most unpopular action, and a 
sort of reproach to a master among his neighbors and equals. 
We seldom indeed hear of this combination, because it is the 
usual, and one may say the natural, state of things, which 
nobody hears of Masters, too, sometimes enter into particular 
combinations to sink the wages of labor even below this rate. 
They are conducted with the utmost silence and secrecy till the 
moment of execution; and when the workmen yield, as they 
sometimes do without resistance, though severely felt by them, 
they are never heard of by other people. Such combinations, 
however, are frequently resisted by a contrary defensive combi- 
nation of the workmen, who sometimes, too, without any provo- 
cation of the kind, combine of their own accord to raise the 
price of their labor. Their usual pretences are, sometimes the 
high prices of provisions, sometimes the great profit which their 
masters make of their work. But whether their combinations 
be offensive or defensive, they are always abundantly heard of. 
In order to bring the point to a speedy decision they have 
always recourse to the loudest clamor, and sometimes to the 
most shocking violence and outrage. They are desperate, and 
act with the folly and extravagance of desperate men, who must 
either starve or frighten their masters into an immediate com- 
pliance with their demands. Their masters, upon these occa- 
sions, are just as clamorous upon the other side, and never cease 
to call aloud for the assistance of the civil magistrate, and the 
vigorous execution of those laws which have been enacted with 
so much severity against combinations of servants, laborers, and 
journeymen. The workmen, accordingly, very seldom derive 
any advantage from the violence of those tumultuous combina- 
tions, which, partly from the interposition of the civil magis- 
trate, partly from the superior steadiness of the masters, partly 
from the necessity which the greater part of the workmen are 
under of submitting for the sake of present subsistence, gen- 
erally end in nothing but the punishment or ruin of the ring- 
leaders." 



THE DISTEIBTJTION OF WEALTH. 331 

But labor organizations are more powerful and effective now 
than in the time of Adam Smith. It cannot be said that they 
now end in nothing but the punishment or ruin of the ring- 
leaders. . They very often accomplish the objects at which they 
aim. They are able to secure an advance of wages and shorter 
hours ; but they push up prices along with wages, and the 
advantages gained by one class of workers are mainly at the 
expense of other classes of workers. They do not prevent, if 
indeed they even check, the aggregation of wealth. These labor 
contests not only suspend industry for the time being, but 
greatly hindering the regular movement of production and dis- 
tribution, they make employment more irregular and uncertain, 
diminish the total product, and thereby reduce wages. 

When the wages of miners are advanced, the price of coal 
advances also; the price of iron responds to advance of wages 
in the iron industries ; and the price of the product in all indus- 
tries, where labor is hired by capital, keeps well in front. A 
man cannot outrun his own face, nor can wages overtake 
prices. 

One class of laborers may secure substantial advantages by 
means of organization and strikes, but chiefly at the expense of 
the workers at large, and particularly of unskilled laborers. 

In the United States, during the six years from 1881 to 1886, 
inclusive, there were two hundred and fifteen strikes against the 
employment of non-union men, and one hundred and sixty-seven 
lock-outs against the demand for the observance of union appren- 
tice rules. And recently the green-glass blowers have expended 
two hundred and fifty thousand dollars in a protracted strike, 
the purpose of which was to limit the number of apprentices in 
each factory to two for any one year. 

In the time of Adam Smith the various trades were generally 
in the hands of corporations, and the term of apprenticeship as 
well as the number of apprentices was regulated by by-laws of 
these corporations. The statute of apprenticeship, 5th Eliza- 
beth, which was construed to apply to market towns only, 
provided that no person should exercise any trade, craft, or 
mystery at that time exercised in England unless he had pre- 
viously served to it an apprenticeship of seven years. The silk- 
weavers of London enacted a by-law prohibiting any master 



332 THE DISTRIBUTION OF WEALTH. 

from having more than two apprentices at a time. The cutters 
of London limited the number to one apprentice at a time to 
each master-cutter. No master-hatter could have more than 
two apprentices anywhere in England. 

On the Continent, seven years was the usual term fixed for 
the duration of apprenticeships. In Paris, five years was the 
term required in many trades. 

The principal object of this long term of apprenticeship was 
to restrict the number of artisans by adding to the expense and 
the time required in acquiring a trade. The purpose and the 
effect of the general policy pursued was to restrict competition. 

The law no longer seeks by means of onerous restrictions to 
limit industrial education, or to confer upon any industrial class 
the advantages of a monopoly. But trades unions, labor organi- 
zations, and the general disposition to promote individual inter- 
ests at the expense of the public are still operative and effective 
in limiting industrial education, restricting production, and 
denying to many those opportunities which should be open as 
common privileges to all working-men. Strikes which have for 
their purpose tha restriction of the number of apprentices or 
the exclusion of any working-man from the privilege of pursuing 
any industry he may choose should be prohibited as criminal 
conspiracies. Strikes in general have had the excuse of a legiti- 
mate purpose, and no dOubt have frequently accomplished much 
good ; but when strikes are organized by any class of working- 
men for the purpose of advancing their own interests at the 
expense of the weaker members of society, and appropriating 
to themselves the special advantages which the monopoly of 
any industry is supposed to confer, they are not only destruc- 
tive of the public welfare, but they are in direct subversion of 
private rights, and cannot be justified according to any principle 
of economic or moral law. 

It should be the policy of the state to encourage industrial 
education, and to this end technical schools should be estab- 
lished and maintained at public expense. The advantages of 
such schools should not be restricted to those who may have the 
means and disposition to pursue an elaborate course of study ; 
the purpose should be, rather, to widen the opportunities and 
stimulate the ambition of the masses of the people while 



THE DISTRIBUTION OF WEALTH. 333 

affording special facilities to such as may seek a high degree of 
proficiency in any art or calling. 

LIMITATIONS BY STATUTE ON RATE OF WAGES. 

So far we have considered limitations upon the margin of 
profit interposed by the force of economic laws and legislative 
restrictions, operating for the most part indirectly and with 
uniform effect upon the profits of capital, in whatever form or 
industry invested. It remains to consider another class of 
limitations by means of legislative law operating in a manner 
more direct, or applied to particular forms of industry. 

Attempts have been made, but without success, except in 
particular instances, or under special conditions, to fix by law 
minimum or maximum rates of wages and maximum prices of 
commodities. One reason why the rate of wages may not be 
prescribed by legal enactment is that the value of the product 
may not be determined beforehand for a whole state, nor for a 
fixed period of time, and wages fixed by law might amount to 
more than the prodirct or else they might amount to so much 
less than the product as to be wholly out of proportion thereto, 
and laborers might refuse to work for the wages allowed. Both 
wages and profits must vary somewhat in different localities, 
and in different years and different seasons. No general law 
could be framed that would be equitable or practicable. Nor is it 
policy, if it were practicable, by arbitrary enactments to attempt 
to limit the free play of social forces within too narrow bounds. 
It is the province of the law to restrain the strong and to assist 
the weak, but not to impose restraints upon individual freedom 
that may not be fully justified by public necessity. 

Attempts to regulate the rate of wages, and also the price of 
products, were not infrequent in the earlier history of legislation 
in England.* Adam Smith says, " That though anciently it 

* " Anotlier relic of medisevalism was the regulation of wages by justices 
of the peace, a practice enjoined by tlie Act of Elizabeth already referred to. 
Adam Smitli speaks of it as a part of a general system of oppression of the 
poor by the rich. Whatever may have been the case in some instances, this 
was not generally true. The country gentry were on the whole anxious to 
do justice to the working-classes. . . . The justices often ordained a rise in 
wages, and the workmen themselves were strongly in favor of this method 



334 THE DISTKIBUTTON OF WEALTH. 

was usual to rate wages ^rst by general laws extending over 
the whole kingdom, and afterwards by particular orders of the 
justice of the peace in every particular county, both these 
practices have now gone entirely into disuse." " By the ex- 
perience of above four hundred years," says Dr. Burn, " it seems 
time to lay aside all endeavors to bring under strict regula- 
tions what in its own nature seems incapable of minute limita- 
tion ; for if all persons in the same kind of work were to receive 
equal wages there would be no emulation, and no room left for 
industry or ingenuity. 

" Particular acts of Parliament, however, still attempt some- 
times to regulate wages in particular trades and in particular 
places. Thus, the 8th of George III. prohibits, under heavy 
penalties, all master-tailors in London, and five miles round it, 
from giving, and their workmen from accepting, more than two 
shillings and seven pence half-penny (sixty-three cents) a day, 
except in case of a general mourning." The early history of 
New England discloses legislation of similar character. There 
were statutes prescribing the prices of victuals, drink, and 
bread-stuffs. A meal at an eating-house was six pence, and one 
penny additional for a quart of beer. A statute of Connecticut 
fixed the wages of carpenters, plough wrights, wheelwrights, 
masons, joiners, smiths, coopers, and mowers at twenty pence 
per day from March 10 to October 11, and eighteen pence 
thereafter, and prescribed eleven hours for a day's work in 
summer and nine hours in winter. The wages of other work- 
men were fixed at two pence less. In Massachusetts the lawful 
hire of a steer was nine pence per day, or twelve pence for a 
grown ox ; of a horse, sixteen pence. Master-carpenters, joiners, 
coopers, bricklayers, plasterers, and rivers of clapboards were 
allowed two shillings in summer and twenty pence in winter. 
Other mechanics, "experienced and diligent," were allowed 
eighteen pence in summer and fourteen pence in winter. In 
1650 the prices of cereals were fixed by law as follows : wheat, 
four shillings six pence; peas, three shillings six pence; rye, 

of fixing them. The employers, on their part, also often approved of it. In 
fact, we have an exactly similar system at the present day in boards of 
arbitration." — Industrial Revolution of the Eighteenth Century in England. 



THE DISTRIBUTION OP WEALTH. 335 

three shillings six pence ; Indian corn, three shillings, — all per 
bushel. 

NATURAL MONOPOLIES. 

In many, if not most, of the States there are still in force 
statutes limiting the amount of toll that may be taken for 
grinding flour, and requiring the miller to assist in loading and 
unloading. The limitation by law of the amount of toll before 
the day of railways was justified by the fact that flouring-mills 
were, in a measure, natural monopolies. One mill was sufficient 
for the people who resided within convenient distance, and 
mills were necessarily too far apart for competition to have its 
full effect. People could not well protect themselves from over- 
charges by driving to distant mills, since the expense of the 
longer drive would exceed the amount of overcharge. Legis- 
lative limitation was the only protection adequate to prevent 
extortion. And the cost of grinding was so nearly uniform 
throughout the country, and from year to year, as to present 
no great obstacle to the application of a maximum limit that 
would, at the same time, leave room for reasonable profit and 
protect the people from any considerable extortion. When, 
however, through the agency of railways, mills were all brought 
into close competition with one another, there remained no 
reason for legislative restriction; and laws regulating toll of 
flouring-mills, though still carried on the statute-books of many 
States, are no longer needed, and they only remain from neglect 
to repeal them. They have become inoperative by reason of 
competition, which has reduced the cost of grinding below the 
old prices and confines the margin of varying charges within 
narrow limits. 

The limitation of charges for hack fare is everywhere recog- 
nized as within the proper scope of legislative supervision. Not 
because of any lack of competition among hack-drivers, since 
the supply has always been in excess of the demand ; but people, 
if inclined, do not have the time to stipulate beforehand as to 
hack charges, nor will they protect themselves against extortion 
by disputing a fare, at the risk of an altercation with an imper- 
tinent clown, in a public place. In this case the chance for 
extortion grows out of the smallness of the amount involved in 
any one transaction and the frequent recurrence of the oppor- 



336 THE DISTKIBUTION OF WEALTH. 

tunity, the necessary lack of knowledge on the part of the 
travelling public of the individuals with whom they are com- 
pelled to deal, and the circumstances of time and place which 
enable those disposed to take advantage to enforce extortionate 
charges. Here the power to extort money beyond a reasonable 
compensation, as in case of natural monopolies, arises out of the 
peculiar conditions. 

]^o difficulty is here found in applying legislative restrictions ; 
since, although the effect of limiting fares is to reduce the num- 
ber of hackmen, the number that survive is always adequate to 
the demand. 

While the effect of limiting fares is to lessen the number of 
those who engage in the business, the compensation of those who 
continue is not reduced ; the smaller amount which is paid by 
the travelling public is divided among a smaller number, the 
earnings of each remaining the same. 

The limitation of freight charges and passenger fares on rail- 
ways, and of fares on street railways and ferry-boats, is founded 
on the public necessity of restricting charges for services ren- 
dered by natural monopolies which are not fully subject to the 
limiting power of competition. The charges of telegraph com- 
panies, telephone companies, and gas companies are embraced 
in the same necessity, and ought to be, and will be, made subject 
to limitations fixed by law ; since they are subject to none other 
that are operative within the range of gross extortion. 

Here, again, no great difficulty is experienced. The volume 
of business, which expresses the amount of the total product, 
varies between limits that may be readily ascertained ; so that 
the effect of a proposed hmitation of rates may be estimated 
with approximate accuracy. It will be observed that this form 
of legislative restriction involves no direct limitation of either 
wages or profits. 

If, in addition to limitations by the imposition of fixed maxi- 
mum charges, the business were further subject to the varying 
limitations imposed by competition unrestricted by natural con- 
ditions, capital might thereby be exposed to the hazard of doubt- 
ful results, from which it would be restrained from protecting 
itself by expedients permitted in the management of other busi- 
ness enterprises ; but when capital is invested in any business 



THE DISTKIBUTION OF WEALTH. 337 

beyond the range of effective competition, legislative limitations 
of the character imposed on the charges of railway companies 
and similar natural monopolies may be applied without endan- 
gering reasonable profits ; and the necessity of some restriction 
in cases where, without legislation, there are none, fully justifies 
the imposition of legislative restraints. 

PATENT RIGHTS. 

Patent rights are artificial monopolies created by law for the 
encouragement of invention. As a reward for industry, perse- 
verance, and talent, the patentee, in the event of success, is 
assured in the absolute control of the market during a limited 
period of years. It may be that, on the whole, the compensa- 
tion of inventors has not exceeded a reasonable reward for ex- 
ceptional perseverance and talent. But the monopoly, designed 
for the benefit of inventors, generally falls into the hands of 
shrewd capitalists, who have done little to give them title to it 
except to drive a hard bargain with some poor inventor who 
has wasted his years and his means in pursuit of a possible for- 
tune, which, in the hour of his success, his hard necessities com- 
pel him to relinquish to the grasping avarice of one of those 
whose trade it is to thrive on the misfortunes of others. 

The law is deficient in two things : first, in such provisions as 
would prevent the inventor and his family from being wholly 
deprived of the royalty of his own invention, even by his own 
act ; second, in not protecting the people, by in some manner 
limiting the maximum profits which may be derived through 
any patent. The extent of the aggregation of wealth through 
the agency of patent-right monopolies cannot be ascertained; 
but in many departments of manufacture profits have been 
enormous. E"o other single agency perhaps, except interest on 
money, is more responsible for the present inequitable distribu- 
tion of wealth. The wrong done to the masses of common 
people, and especially to the agricultural classes, has been fla- 
grant and gross ; and yet there has been no great outcry against 
it, for the reason that the people have never understood, nor do 
they now understand, that great profits in one industry mean the 
robbing of some to build the fortunes of others ; that wealth and 
poverty are correlative conditions, even in the closing decades 

22 



338 THE DISTRIBUTION OF WEALTH. 

of the nineteenth century, wlien the power to produce has far 
outrun the power to consume, and the workers in our manu- 
facturing industries, with the aid of machinery, electricity, and 
steam, can, in one day, do more than a like number of workers 
could have done in a month, eighty years ago. 

LIMITING THE RATE OP INTEREST AND THE OWNERSHIP OF LAND. 

The theory that a reduction of the rate of interest, or of 
profits on capital, would tend to the aggregation of wealth, 
springs from a mistaking of effect for cause. It is true that 
small j)rofits and small accumulations of wealth are, as a rule, 
found only in conjunction. The same may be said of low wages 
and small savings. But it is not therefore claimed that small 
savings are the cause of low wages. On the other hand, it is 
clear that low wages are the cause of small savings. So it is 
equally plain that a small amount of general savings, or a small 
product of durable property, is the cause of both a low rate of 
interest and low wages. The same cause which reduces the 
share of the worker reduces the portion of capital. The neces- 
sary effect of lowering profits by limiting the rate of interest 
is not to reduce the total savings of the country, but to bestow 
a larger share upon the workers in the form of wages, or the 
earnings of labor. Thus the opportunity to save would be dis- 
tributed among a greater number of people, and, instead of 
aggregating wealth, would divide it among those who create it, 
and who are entitled to enjoy it. At present, the working-man 
who saves even a home must do so at the expense of a degree 
of self-denial that deters many from the effort, and defeats many 
more in the attempt. 

When, by extreme self-denial, shrewd cunning, or by lucky 
chance, one succeeds in accumulating a small capital, he may 
then climb upon the necks of his fellows and ride into fortune ; 
and, if he succeeds, the world applauds, for " there is nothing 
like success." This vulgar maxim is the plebeian brother of the 
phrase " the divine right of kings," born of the doctrine enter- 
tained by titled nobles, that it is a part of the scheme of Prov- 
idence that the common people should be by them saddled and 
ridden at will, and then turned out like donkeys on the common, 
to feed and renew their strength for the morrow's journey. 



THE DISTRIBUTION OF WEALTH. 339 

The equal right of all men to life, liberty, and the pursuit of 
happiness must be admitted in practice as well as theory ; and it 
is the duty of every government, so far as practicable, to pre- 
serve to all its people alike an equality of opportunity. Its 
efforts should be to give every man a chance, not to get other 
people's earnings, but to keep his own; and to see that the 
weak, by the encroachments of the strong, are not deprived of 
those things which are by nature the common heritage of all 
" I got here first" may be a good claim to a reasonable share of 
land, but not to a State or county or town, to the exclusion of 
those who come after. There is no divine decree commanding 
that the world shall be parcelled out among a chosen few who 
shall exact tribute from the rest of mankind for the privilege 
of enjoying a share of nature's gift. 

And, on the other hand, the sense of individualism, the prompt- 
ings of desire, and all the finer instincts of human nature unite 
in protest against any scheme to destroy competition, tame 
human endeavor, stifle the leaping aspirations of youth, and 
dull the sense of keenest joy, by drowning emulation in the 
Dead Sea of communistic equality. In order to correct social 
abuses and industrial wrongs, it is not necessary to tear down 
the old-established institutions and build anew according to 
plans revealed in dreams. 

Our social structure has been slowly and gradually evolved, 
under the shaping hand of time, by the forces of human na- 
ture. We cannot tear it down if we would ; its foundations are 
deep, its walls are lofty and strong. Civilization will never con- 
sent to abide in a habitation artificially constructed, arranged, 
and decorated, according to the elaborate specifications of arti- 
sans who, through success at scroll-saw fancy work, have 
acquired the reputation of social architects. 

But reforms are needed, and sooner or later they will come, 
and demand admission with an authority that cannot be ques- 
tioned. Better to make way for them and bid them welcome. 
Much may be doile. Obstructions may be removed ; economic 
forces may be assisted, modified, or hindered ; currents may be 
turned into new channels ; industrial laws may be conformed to 
the demands of justice and equal rights ; and the struggling 
poor may be assisted upward into the sunlight of a warmer 



340 THE DISTEIBUTION OF WEALTH. 

social life, where the destroying blight of poverty may not 
reach, and kindlier feelings and nobler aspirations will be 
nourished into growth. 

The remedies here suggested do no violence to social order ; 
they involve no destruction of property rights, no overthrow of 
established institutions, no chimerical scheme of communistic 
equality, no artificial reconstruction of human society, no un- 
tried experiment freighted with possibilities of extreme disaster. 
They conform to the principles of tried legislation embodied in 
existing statutes, and may be subjected to the test of experience 
without any rearrangement of the industrial programme. They 
involve no temporary expedients; and yet, I believe them to be 
effective and, in conjunction with revenue measures elsewhere 
suggested, sufficient. Full scope is left for the free play of the 
desires, hopes, and ambitions of men. The acquisition of prop- 
erty is aided and encouraged, and not restrained, except from 
those excessive accumulations by which are built up great for- 
tunes that represent booty gathered from the people by the use 
of an unjust advantage, which accumulated capital possesses, in 
competition with labor. Talent and skill will still be left free to 
contend for the prize of fortune honorably won ; and, in plain 
view of every man who toils, the future will display the promised 
reward of a home, a competence for old age, and a little store 
of wealth for dependent wife and children. Where to-day he is 
loitering on the way, weary of the burden of unrequited toil, 
now and then, perchance, quickening his sluggish pace as he 
catches the gleam of distant gold, only to resume his lagging 
step as he reflects that his vision extends beyond the goal 
where the journey of his years must end, then, encouraged and 
buoyed with the hope of generous recompense, he will march 
forward with strong and steady tread to the achievement of 
possible aims. 

Competition is one of the vital forces of all social and indus- 
trial life. But competition unrestrained enables the strong to 
trample the weak underfoot ; by it monopoly may be built up 
as well as destroyed ; by means of competition the great capi- 
talist crushes small competitors, and everywhere the strong 
override the weak. How far the government should interfere 
is always a question to be determined relative to existing con- 



THE DISTRIBUTION OF WEALTH. 341 

ditions, the stage of civilization, and of moral, intellectual, and 
industrial development. No universal formula can be devised. 
"W^e cannot abolish human passions, nor eliminate selfishness and 
avarice as potent factors in commercial life ; v^e cannot change 
the elemental forces, but we can restrain and limit their action ; 
and this is the purpose of nearly every law that is enacted. It 
is not at all necessary that industry or commerce should be 
fretted with limitations that interfere with that free play which 
is essential to general prosperity ; nOr should unlimited license 
be permitted to the strong to despoil the weak in the name of 
free competition and unrestricted trade. 

That it is practicable to arrest the centralization of wealth in 
this country, and to secure and maintain a more equitable distri- 
bution of wealth than that which now exists in this or any of 
the nations of Europe, is certain. That this result may be ac- 
complished by means of general legislation, conforming to 
clearly- defined principles, is also evident. The people, however, 
do not much concern themselves about dangers that lie some 
distance in the future ; they are disposed rather to pursue what 
appears to be present interest, and secure immediate results. 
And so we shall drift forward much like a whaling vessel on the 
high seas, often shifting our course and crossing our own track 
in pursuit of the whale we may for the time be chasing. 

However, education is more nearly universal now than at any 
other period in history, and more nearly so in this country than 
in any other. There has been awakened an interest in eco- 
nomic science, and the masses of the people realize, to an extent 
which they have never realized before, that the general frame 
and policy of the laws of a country have much more to do with 
the prosperity of the people than is apparent to casual or 
superficial observation. 



342 THE DISTEIBUTION OF WEALTH. 

CHAPTEE XII. 

EDIJCATION OP THE PEOPLE. 

Improvement in the condition of the working-man necessarily 
depends, in chief measure, upon his ability and disposition to 
help himself. The law may secure to him opportunity, and may 
protect him from the encroachment of superior power; but 
being himself the maker of laws, the source of the policies by 
which his destiny is shaped, it is to himself that he must look 
for whatever measure of relief may be found in constitutions or 
in the operation of friendly statutes. Those who are unable to 
help themselves, must be content to occupy such position as 
may be assigned to them, and enjoy such advantages as may be 
conceded to them by others, whose chief effort it must be to 
promote their own individual welfare. It is therefore evident 
that the working-man must possess the degree of intelligence 
and information required in order to enable him to comprehend 
his own interests, and the measures by which they may be pre- 
served and promoted. And it is, perhaps, still more important 
that the great body of working-people should possess that de- 
gree of loyalty to principle that is essential to secure united 
effort in the promotion of common interests. Without conform- 
ing to these requirements that steady concert of action neces- 
sary to achieve results cannot be secured ; and the welfare of 
the working-people, as a whole, will be lost sight of in the selfish 
individual pursuit of immediate temporary advantage, or of 
cunningly-devised policies designed for the promotion of special 
interests under the cover of a seeming purpose to promote the 
general welfare. 

In this connection may be mentioned a great and growing 
evil, in the suppression of which working-men have a special 
interest. I refer to the use of money in elections. 

The commercial vote of the country, already large, is steadily 
increasing. The number of those whose votes may be pur- 
chased, in many communities, will exceed ten per cent, of the 
total vote. While there are no statistics on the subject, every 



THE DISTRIBUTION OF WEALTH. 343 

person who is well informed concerning the manner in which 
elections are conducted is cognizant of the fact that large num- 
bers of American citizens make merchandise of the elective 
franchise. Where the evil prevails, these persons are known, 
and their names may be found alphabetically arranged on the 
lists of local political managers. And, if necessary, the execu- 
tive force of either of the great political parties of the country, 
when in perfect organization for practical campaign work, could 
in thirty days ascertain, by a close approximation that would 
do credit to the census bureau, the number of American citizens 
who, for a consideration of from fifty cents to twenty-five dol- 
lars, the amount depending on the individual and the state of 
the market, can be persuaded to cast their ballots for the candi- 
dates of either of the contending parties. 

To be elected to any office frequently costs the successful 
candidate more than the emoluments of the office amount to ; 
and he who gets through at the expense of a year's salary may 
congratulate himself; while the unsuccessful candidate, who 
loses both his money and the office to which he aspires, is liable, 
in consequence, to become involved in that financial ruin which 
frequently marks with painful emphasis the disappointment of 
defeated ambition. 

The degree of demoralization varies greatly in different locali- 
ties, and many counties are almost wholly exempt. But, in 
the aggregate, the amount of money expended for venal pur- 
poses in contests for nominations, and in elections, is very 
great. 

" How much money has he to put into the fight ?" is one of 
the most common inquiries made concerning an aspirant for 
nomination to a public office. And, where contests are close 
and the floating vote is large, it is the usual thing to select a 
candidate with distinct reference to his bank account. 

It is the custom to refer the responsibility for this evil to poli- 
ticians, and to candidates who are frequently, in fact, but the 
unwilling victims, unable to ignore prevailing conditions. Per- 
sonal interest, laudable ambition, an honest belief that certain 
principles or policies ought to prevail, and a public opinion that 
howls for success, compel men to yield to the demands of those who 
are moved by no consideration higher than a desire for money, 



344 THE DISTRIBUTION OF WEALTH. 

and whose demands are always accompanied by the certainty 
that, unless complied with, their votes will count on the other 
side. A candidate for office is considered the legitimate prey of 
every political black-mailer in his district, and his success gen- 
erally depends to a great extent upon the manner in which he 
complies with the demands upon his purse. 

As a rule, those who interest themselves in public affairs, and 
conduct the management of political campaigns according to 
the terms prescribed by an established usage, are less to be 
censured than may be supposed. If they who are most prone 
to visit censure upon politicians were themselves to enter into 
this branch of a necessary public service, they would find it 
somewhat difficult to get through the heat and dust of a politi- 
cal campaign, wearing robes of spotless white, without showing 
a few unseemly smudges at the close. 

The drawing-room moralist who, that he may preserve his 
virtuous innocence untarnished and his reputation unscarred, 
stands aloof from the battle, and who, 

" But for these vile guns, would himself have been a soldier," 

may be a very proper and circumspect individual, but he is not 
one of the most useful members of society. 

The blackened face of the miner, the calloused hands of the 
mechanic, the grim visage of the engineer are pledges of work 
performed ; and in the moral and political field there are con- 
taminating contacts that cannot always be avoided by those 
who achieve results. 

The demoralization of the people is to be condemned not only 
as a great moral evil, but the working-men, who are most ex- 
posed to the danger that lurks in corrupt elections, have special 
interest in the preservation of the integrity and dignity of the 
American voter. Wealth is already a potent factor in elections. 
Political managers, politicians, legislators are brought under 
obligation to a power which they dare not offend. Those who 
are most able, and most inclined to serve the interests of the 
people, are often deterred from seeking political preferment. 
Legislative action that would promote the interests of working- 
men to the injury of monopolies, or to the detriment of aggre- 



THE DISTBIBUTION OF WEALTH. 345 

gated wealth, is prevented ; for a political party must take care 
not to arouse the angry antagonism of those who hold the power 
to defeat it. The evil, at present, is not that votes are bought 
for the special purpose of subserving the interests of wealth. 
It lies rather in the fact that political parties, being largely de- 
pendent for success upon contributions from men of great 
wealth, must so shape their policies as not to give offence to 
those who, by withholding their aid, or by contributing to the 
opposing party, have it in their power to prevent success. 
"When a party assails the evils of aggregated wealth, it awakens 
an enemy whose opposition it cannot withstand. 

The masses of honest voters naturally divide in nearly equal 
numbers between the two great political parties of the country. 
Each side is always intensely desirous of success. Aggregated 
wealth holds the power to control the commercial vote, and 
give success or bring defeat to either party, — to either cause. 
Thus wealth is able to dictate to either party, and neither 
party dare venture far enough to give serious offence. They 
come to the lion in the pathway, and then prudently turn back. 

The ballot is the working-man's only protection. The elec- 
tive franchise must be guarded as the most sacred privilege of 
freemen. If votes are to be bought and sold as an article of 
merchandise, then truly money is king, and every politician 
and every citizen seeking political preferment must do the king 
homage. And there are six millionaires in the United States 
Senate to-day to attest the measure of their loyalty. 

Legislatures, manifesting double zeal in the pursuit of abstract 
justice, and none at all in the pursuit of practical results, have 
generally enacted laws punishing alike the man who buys and 
the man who sells his vote ; and thus, closing the mouths of all 
witnesses to the transaction, have protected both parties from 
exposure to the censure of public opinion by making secrecy a 
necessity alike to each. 

If those alone who barter their votes should be made subject 
to penalty, all others could be required to testify ; and grand 
juries would need have no great difficulty, by following the con- 
tributions of candidates and others to the point of ultimate ex- 
penditure, in discovering those who have sold themselves. The 
evil can be reached and broken up when there is developed a 



346 THE DISTRIBUTION OF WEALTH. 

disposition to resort to practical measures. Disfranchisement is 
a natural and appropriate penalty. 

A system of balloting, like that known as the Australian Sys- 
tem, that leaves the voter to select and deposit his ballot, with- 
out the presence and free from the espionage of any who may 
have an interest to see that a vote has been delivered according 
to promise, will, in time, greatly modify the evil. But the only 
remedy that can be relied on as effective and complete is 
universal education and the higher standard of manhood which 
intellectual and moral training alone can secure. 

Improvement in the condition of the working-man depends 
upon his intelligence ; upon his having a true conception of his 
relations as a moral and social being ; upon his sentiments of 
equity and justice ; upon the strength of his affections ; and 
upon his reverence for worthy ideals. 

Our public schools afford fair opportunity for secular educa- 
tion and a certain amount of moral training and social culture ; 
but the number of children who, because of the poverty or 
indifference of parents, are not permitted to enjoy the oppor- 
tunities placed before them is very large. That mass of crude, 
untrained humanity, without aspirations, without worthy am- 
bitions, without sentiment, that lives but to eat and drink, com- 
petes for the lowest wages, and drags to the level of its own 
standard all those pursuing occupations that lie within reach of 
its sullied hands, grows day by day. Occasionally are seen per- 
sons of refinement and education, by accident or misfortune, 
thrust down to the lowest industrial level, compelled to measure 
their necessities by the standard of this vulgar herd. 

It is from this crowd that capital draws constant supplies of 
labor with which to beat down wages, in the interest of higher 
profits ; for there are few who, though their intelligence be of a 
low order, may not be utilized to feed a machine, and thereby 
displace some worthy man who is not content with the bare 
necessities of food and raiment and squalid shelter. 

The intelligent working-man cannot afford to compete with a 
human automaton. And he must see to it that the people who 
stand upon this low plane are lifted to a higher level. If they 
were exclusively confined to one industry, and were wholly out 
of the line of direct competition with working-men of other 



THE DISTKIBUTION OF WEALTH. 347 

orders, their influence might be little felt beyond their own in- 
dustrial circle. But they spread through the industries; and 
everywhere their competition is more or less felt in reducing 
the standard of living, and thereby lowering the standard of 
wages. 

Every measure that may be effectively employed to promote 
the education of the people is a measure in the interest of 
working-men who aspire to a degree of comfort and refinement 
above the coarse and meagre subsistence that satisfies the more 
urgent wants of those who have not learned to live. 

Every available agency should be employed to get children, 
whose education is being neglected, into school, and to keep 
them there ; and, when necessary, compulsory measures should 
be employed. From an economic stand-point alone, general 
education is a necessity in the interest of working-people. He 
who seeks to share in this great social and industrial copartner- 
ship should be required to comply with the conditions necessary 
for the general welfare of the people and in no way hurtful to 
himself 

Care should be exercised in the management and control of 
our public schools. They at present fall far short of that degree 
of efficiency which should be required, and which is readily at- 
tainable, except for the prevailing popular indifference as to the 
more important results of educational training. As aids to the 
moral and social refinement of the people, they lack the support 
and hearty co-operation of parents, as well as the efficiency of 
thoroughly-competent teachers. Yet they nevertheless consti- 
tute the strength of our civilization, and the power on which 
we* must rely for still further progress in the direction of a wider 
intellectual and moral culture. 

If railways, street railways, telegraphs, water-works, gas- 
works, coal-mines, and timber lands could be owned by the 
government and efficiently managed through government offi- 
cials, and if branches of the various manufacturing industries 
requiring large amounts of capital could be established and con- 
ducted by government agents in different localities, so as to 
employ labor otherwise unemployed, at reasonable but moderate 
wages, so as to protect that class of workers who are oppressed 
by the grasping avarice of those disposed to take advantage of 



348 THE DISTEIBUTION OF WEALTH. 

the necessities of others, and by protecting this class relieve the 
labor market from that unhealthy competition which steadily 
depresses the value of labor ; if fire insurance could be furnished 
by the State ; and if the State, as the representative of the peo- 
ple, could receive their small savings and erect for them suitable 
homes, following the principle on which building and loan asso- 
ciations are conducted, but exacting a lower rate of interest, 
very much might be accomplished in aid of those who suffer 
from industrial conditions. But how would it be possible to 
secure and retain in position intelligent, competent, and faithful 
officials to conduct railways and manage telegraphs or manu- 
facturing industries, conducted under government supervision ? 

The ignorance, selfishness, cupidity, dishonesty, and prejudice 
existing among the working-men themselves constitute the 
principal barrier to the success of any scheme of the character 
here pointed out, or indeed of any other effective measure for 
their relief. When the great majority of the working-people 
shall have become intelligent enough to understand their own 
needs, and to comprehend the measures by which their common 
welfare may be promoted: when they shall be willing to re- 
linquish temporary selfish advantages in order to share in the 
benefits to be derived from community of labor and capital; 
when they can be trusted in the selection of competent officials 
of the State or of corporations organized in their interest ; when 
they shall learn to abate somewhat the fierceness of individual 
competition, and submit to regulations looking to the common 
welfare of all classes, it may then be practicable to secure to 
every man the opportunity for steady employment and fair 
remuneration. 

The industrial condition of a people may be gauged by their 
intelligence, and by their social and moral culture. And any 
remedy for industrial evils that does not include education as a 
principal factor is radically defective. An individual with little 
education may succeed; another of the highest attainments 
may fail. But an educated people, or an educated class, always 
succeed ; and the industrial position of an uneducated class is 
always inferior. 

The wages of any industrial class are equivalent to, and 
limited by, the consumption by that class of the products of 



THE DISTRIBUTION OF WEALTH. 349 

labor. Consumption is determined by habit, by intelligence, by 
refinement ; in short, by education. Thus it is education of the 
class that determines the wages of the class. The status of the 
individual worker is determined by his industrial class, and 
every working-man is concerned for the improvement of the 
condition of society in general from which he cannot disasso- 
ciate himself. 

THE WORK OF THE CHURCH. 

During one day of each week ordinary industry is suspended, 
and the j)eople rest from their accustomed pursuits. With this 
day comes to the masses of the people opportunity for leisure, 
social intercourse, the pursuit of useful knowledge, and the culti- 
vation of those refining and ennobling sentiments that shrink 
from the harsh contacts of every-day life. To cultivate these 
sentiments in the hearts of the people, to awaken and strengthen 
their better thoughts and impulses, I conceive to be the chief 
mission of church associations, and the purpose which justifies 
large expenditures of money in the erection of church buildings 
and the employment of an educated ministry. 

As an organized institution firmly established in the customs, 
habits of thought, prejudices, and beliefs of the people, the 
Church has appropriated this day for its own special work. It 
is possessed of advantages and opportunities enjoyed by no 
secular institution ; and, in great degree, it must be judged by 
results, as measured by the moral and religious condition of the 
people. May it not have failed to fully grasp the true con- 
ception of its mission ? Eeligious organizations are one of the 
natural outgrowths of human society. There is no civilized 
people without them. They vary in form and character accord- 
ing to the people who compose them. They are as perfect as 
other social institutions, and no more so. They may be most 
effective agencies to promote, or most effective obstructions to 
hinder and delay, the moral growth of society. Being, in their 
nature, fashioned by ancient traditions and long-established 
ideas, they are essentially conservative. It is in the nature of 
things that they should change but slowly, and operate as a 
constant check upon the tendencies of advancing thought. But 
their advance movements are liable to be too long delayed, 
while the people go from them and their influence is weakened. 



350 THE DISTKIBUTION OF WEALTH. 

The fact that they everywhere exist, and always have existed, 
is quite sufficient evidence that they are to continue as one of 
the principal agencies in moulding popular ideas and impulses. 
That they perform a useful and necessary service ought to be 
apparent even to those who find nothing to commend in the 
special mission which they assume. Whatever we may think 
of any formulated system of theological beliefs, nevertheless 
there are certain sentiments that cluster around the faiths of 
religion, and which, among the people at large, under the in- 
fluence of defined ideals fashioned in the mould of venerable 
traditions, are nourished into growths that no people can afford 
to neglect. 

It is, of course, unreasonable to expect that all the world may 
be driven to accept any one form of speculative theological 
belief; or that there is any principle of ethics involved in be- 
lieving or not believing this or that, or in believing nothing at 
all. Fancies with regard to the unseen world naturally shape 
themselves into beliefs, and certain accepted ideals become cur- 
rent among the people of a nation or an age ; and the realist 
who conceives it a duty to subject this poetry to the test of 
philosophy has no true conception of the nature and needs 
of the human mind. Whether Satan be an absolute physical 
reality of definite specific gravity, or the conception of a 
boisterous fancy, the Gulliver of religious romance, it is not 
necessary to inquire. He has enacted a leading part in the 
drama of human life, and is still doing service in the field of 
ethics as a vivid personification of evil. His period of useful- 
ness has not yet expired ; and though bearing the scars of many 
wounds from the spear-thrusts of modern science, he is still 
abroad dodging in and out across the pathway of human life, 
in the dim twilight of uncertainty that hangs on the edges of 
the day. 

The higher Christian ideals, which exhibit the best concep- 
tions of divine character, are most valuable aids in subduing the 
selfish instincts of human nature, and in purifying and refining 
human thought and feeling. To preserve these noble concep- 
tions and mould character into correspondence with these lofty 
ideals is peculiarly the function of the Church and its ministry. 
But these ideals are not to be subjected to the taj^e-line measure- 



THE DISTRIBUTION OF WEALTH. 351 

ments of prosaic logic, nor tested by the rules of material 
science ; and the minister who conceives it to be his duty to 
stake the claims of the Christian religion upon the correspond- 
ence of these conceptions with absolute realities understands 
little of the philo80]3hy of human thought and feeling. He who 
conceives it to be his mission to be continually pulling down 
the fancy- woven drapery that adorns poetic ideals, in order that 
he may count the meshes and exhibit the texture, is but a 
clumsy realist out of place. He who makes the test of religious 
virtue the belief, or professed belief, in some grotesque meta- 
physical distortion, instead of pure and noble sentiment, is a 
destroyer of faith and an enemy to the cause he assumes to 
espouse. When metaphysical beliefs are exalted into virtues, 
and honesty, purity, nobility of sentiment, and refinement of 
feeling are degraded to the rank of secondary merit, religion 
loses its power and its worth. The prevailing apathy, to say 
nothing of the open antagonism, towards the Church at the 
present time can be accounted for only by the natural repug- 
nance of the human mind to the idea of a compulsory acceptance 
of a code of distorted metaphysics as a test of religious merit. 
If the energy of the Church were directed to the teaching of the 
saving power of the Christian virtues instead of the saving 
power of beliefs which are to-day professed only in a per- 
functory sort of way by many of the most intelligent and 
enlightened leaders of the Church itself, then the influence of 
genuine religious faith would take hold of the hearts of the 
people, and the minister would become a more effective teacher 
and leader. 

The hope of immortality springs perennially in the human 
heart. Mind cannot be chained to matter; the imagination 
will never stay its flight within the bounds of material vision, 
but will continue to soar into the realms of poetry and romance, 
and gather flowers of beauty with which to adorn the realities 
of life. It will continue to fashion ideals, and the human heart 
will do them reverence. Beliefs concerning supernatural things 
have their origin in the nature and constitution of the human 
mind ; they are irrepressible, and no philosophy can extinguish 
or supersede them. But it is not the function of the Church to 
stereotype these beliefs into unchanging forms, and compel 



352 THE DISTRIBUTION OF WEAI.TH. 

poetic fancy to travel a beaten path ; or to put reason on the 
rack to extort confessions of beliefs not honestly entertained. 

There is no class who so much need the support of a warm 
and generous faith in the saving power of Christian virtues, or 
who are more in need of the inspiriting influence of an awakened 
religious sentiment, than the working poor, who, for the most 
part, are beyond the range of effective church influence. The 
Church is a social power, and its best influences arise out of its 
organized social relations. People form in groups about a 
centre of conventional ideas, and enjoy the warmth of sympathy 
that springs from community of thought and feeling. Eeligious 
doctrines are little more than solemn passwords, the answer 
to the " Who comes there ?" of the sentinel. The value of these 
social influences is not to be disparaged. But it is to be re- 
gretted that the direct teaching power of the pulpit should be 
sacrificed to the demands of a Conventional theology that brings 
religion itself into disrepute, and to which men of mature 
thought yield only a formal assent, as a mode of paying respect- 
ful obeisance to social law. 

How, where, and by whom are the masses of the people to be 
educated and trained in the ethics of social life ? by whom are 
they to be taught the art of living aright ? how are they to be 
instructed in the principles and methods of the domestic train- 
ing of children ? how are they to be made to comprehend the 
nature and value of moral worth ? The task of instructing the 
people in the philosophy of social life would appear to be 
peculiarly the work as well as the opportunity of the minister ; 
but his special training is not to that end. As a practical guide 
and teacher, when he has sought to make his influence felt in 
the direction of moral purity, it has too often been as an advo- 
cate of some mistaken policy that demoralizes and destroys. 

It was the pulpit, dominated by theologic dogma, that 
banished amusements from the fireside and the home-circle, and 
drove many into drinking-saloons, and into the by-ways and 
dark corners of iniquity. And the young men and boys and the 
working-men in our towns and cities have followed after. In 
our great cities the task of furnishing amusement and social 
recreation to the laboring poor has been commonly left to the 
retailer of whiskey and beer, who has learned the art of enhanc- 



THE DISTRIBUTION OF WEALTH. 353 

ing the profits of his trade by gratifying the love of music, the 
natural desire for amusement and recreation, and the yearning 
for social sympathy that abides in the human soul. And thus, 
in his leisure, when most subject to the influence of surrounding 
conditions, the working-man is lured to his ruin. 

Cards and billiards and tenpins and social dances have been 
driven from the shelter of religious influence as worldly out- 
casts ; when the devil goes gunning for souls, he can have no 
more faithful assistant than an intolerant, unthinking minister 
to beat the bushes and start the game. 

On every hand may be observed ministers, the scope of whose 
thought is confined within the narrow limits of traditional 
dogma, who, ignoring practical and common-sense methods of 
reform, deliver conventional sermons on the depravity of the 
human heart, or the sin of vanity, in fashionable churches that 
vie with the palaces of millionaires in luxury of adornment and 
splendor of architectural display, or, varying the character of 
the entertainment, give aesthetic sparring exhibitions on Sunday 
with the intangible devil of ghostly romance. 

The result of these efforts is misshapen character; an ab- 
normal pietism on the one hand and a lack of reverence on the 
other ; the world is filled with cant ; religion is divorced from 
ethics ; and the most earnest and sincere religious devotees are 
often found most deficient in moral worth, uncharitable and un- 
generous, wanting in a sense of justice, wanting in a sense of 
honor, while they maintain respectability by observing conven- 
tional standards, and deceive themselves, as they deceive others, 
by assuming those artificial virtues which a false theology has 
set in place of genuine worth. 

What is here said is not with the view of reflecting censure 
upon the minister. He performs the difficult part assigned him 
with fully as much zeal and loyalty to duty as any other mem- 
ber of society. But he is under the bondage of an exacting 
conventionalism ; and, like a pet squirrel in a revolving cage, he 
may whirl the wheel, but he cannot advance. Ostensibly he 
occupies the place of a leader, yet he dare not lead. He may 
only stand still and exhibit the ancient relics of mediaeval 
theology, of which he is custodian ; and when he essays to vary 
his accustomed routine, it is too often only to beat the snare- ' 

23 



354 THE DISTKIBUTION OF WEALTH. 

drum for some squad of visionary reformers. He is confined 
within the narrow limits of prescribed formulas of faith handed 
down from an ignorant and credulous age, and is denied the 
opportunity to do the most effective service to the cause of 
either morality or Christianity. If he does become a student 
of social philosophy, and attempt to put his ideas in harmony 
with the laws of human nature, and range himself in line with 
advanced thought, he incurs the suspicion of the awful sin of 
unbelief in some shaky old dogma which it is the special care of 
theological seminaries to guard from dangerous proximity to 
any useful or practical knowledge. 

In order to better serve the interests of the Church itself, in 
order to promote the cause of genuine Christianity, and to ad- 
vance the moral culture of the people by interweaving into the 
fabric of common thought and feeling strands of pure and noble 
sentiment, the minister must be released from the idle task of 
crocheting the filmy threads of theological metaphysics into 
conventional fancy work for the special pleasure of those who, 
from habit or perverted taste, have acquired an interest in these 
specimens of a useless art. 

The prevailing theology conceives of God as a jealous and in- 
tolerant being, who requires of man that he disregard the 
verdicts of his own reason, and that he accept, as his belief, 
dogmas which to some appear incomprehensible and to others 
absurd ; a God who, instead of esteeming man according to the 
measure of his manhood and real worth, attaches the penalty 
of everlasting punishment to disbelief, while the vilest of men, 
through the agency of that humility and mellow penitence that 
besets cowards when they stand face to face with death, may 
win his eternal love. Such degraded conception of the God of 
the universe is unworthy of a civilized people ; it is at war with 
morality and with noble religious sentiment. 

Such conception is no part of the Christian religion. But it 
appears to be the fate of all great religions to become submerged 
beneath the gross superstitions of the people among whom they 
are promulgated. Barren theological speculation soon displaces 
the plain and simple utterances of ideal sentiment and maxims 
of pure morals in which these messages of truth are delivered 
to the world ; superstition resumes her sway and, in the name 



THE DISTRIBUTION OF WEALTH. 355 

of the divine commission she professes to hold, perpetuates her 
power. 

The Yedic religion of India was a simple code, giving expression 
to the sentiments of integrity, charity, and faith in lofty ideals, 
free from gross superstition or any artificial system of theology. 
But there came to the front a class of men called Brahmins, 
who laid claim to special powers, and built upon the Vedas a 
" huge artificial system by which to rule every moment of a man's 
life." The Yedas were made to say that " when Brahma created 
man, the Brahmins or priests came from his mouth, the soldiers 
from his arm, and the farmers from his thigh, and the Sudras 
(the conquered race) from his foot. The Brahmins thus set 
themselves above all. They laid down rules so strict about 
prayers and sacrifices, and made the favor of their gods to 
depend on such trifling things, that every one was glad to 
secure their help to do these duties aright. The people believed 
that the Brahmins alone knew what foods might be eaten, what 
air might be breathed, what clothes might be worn, and what 
was the proper length of the ladle in which the offering was to 
be put."* Thus were the people brought in bondage to an 
artificial system of ceremonials appealing to superstition alone, 
fraudulently devised for the benefit of an unscrupulous priest- 
hood. In a manner somewhat similar have other religious 
faiths been prostituted to unworthy ends. 

In the earlier centuries of the Christian religion the priests 
promulgated their doctrines, and built up their power by pro- 
claiming eternal damnation to those who refused to believe the 
things which they taught. Perhaps civilization may have 
derived some advantage from the use of this device. Perhaps 
in an ignorant and superstitious age it may be impossible to 
control and lead the ignorant masses, even in the direction of 
their own welfare, without appeals to superstition. Ignorant 
people are not readily swayed in moral or religious matters by 
reason alone, or through appeals to the higher emotions. The 
oracles of Greece and Eome may perhaps be justified. But the 
utility of such devices lies wholly in the past. The coarse 
theology of the Middle Ages is not adapted to the present era. 

* The Childhood of Eeligions. 



356 THE DISTEIBUTION OF WEALTH. 

Its effect at the present time is demoralizing ; and, instead of 
aiding the Church, it is weakening the influence of the ministry. 
It is as much out of place in a religious code adapted to the 
nineteenth century as would be a stone god of the Aztecs in a 
modern church. The sacrifice of cattle and sheep was a useful 
ceremony among a race of semicivihzed people; among an 
enlightened people it would be a coarse burlesque. 

The theology of a people cannot remain stationary. And it 
is a mistake to attach the quality of virtue to an act of belief, 
and thus obstruct intellectual growth and erect a false standard 
of ethics. 

Eeligion is essentially progressive and cannot be imprisoned 
forever in the hard dogmas in which lie dormant the reason and 
conscience of an unenlightened age. After a time the vital 
germ within, warmed into life, will demand air and light, and 
the shell will be broken or the germ must die. What is the 
condition to-day ? Are the ancient faiths of the people grow- 
ing into strong, deep-rooted plants, filling the moral atmos- 
phere with the aroma of a fragrant bloom, rich in the promise 
of ripened fruit, or do they lie dead in the mould of decaying 
creeds ? The Church points to her thousands of splendid edi- 
fices, to her long roll of membership, counts the cash in the 
contribution-box, and serenely answers that all is well. But 
there is another answer. Ministers are preaching to vacant 
benches ; sermons falling on listless ears awaken only the cold, 
half-cynical response of formal assent ; the human heart, that 
" harp of a thousand strings," attuned to another key, no longer 
makes music for the soul in answer to the rude touch of the 
unskilled master who forever strums his medley of resounding 
platitudes ; the weary twang of discordant notes is sweet only 
to those who sleep and dream. 

It is not to be expected or desired that human thought shall 
ever cease to range the field of theological speculation. Theo- 
logical beliefs possess their value, and even the grosser super- 
stitions of a barbarous people may be sometimes utilized to 
good ends. But theology is not of the essence of religion ; and 
as a people advance in knowledge and culture, the influence of 
fixed beliefs concerning supernatural things loses sway. As 
they advance in knowledge, they cease to be controlled by 



THE DISTRIBUTION OF WEALTH. 357 

superstitious fears, the influence of theological dogma declines, 
and, instead of relying upon the will of an unseen Deity, revealed 
in dreams, or formulated into creeds by quibbling priests, they 
learn that the laws of ethics and religion have their origin in 
the constitution of the human mind, in the impulses of the heart, 
in the nature of man. 

A religion that does not make men better or happier here and 
now serves no good purpose. It is a vulgar conception that 
men's souls are to be saved from punishment in a world to come 
by espousing certain beliefs concerning things unknown, and 
that substitutes for the laws of natural ethics the arbitrary 
commands of an unseen Deity, whose wrath may be stirred oi 
appeased by observing, or neglecting to observe, prescribed 
modes or ceremonials. Such doctrines do not have their origin 
in the lofty teachings of the great founder of the Christian 
religion ; they are the remnants of Jewish barbarism and pagan 
superstition, useful, perhaps, in their day as devices for the con- 
trol of an ignorant populace, but altogether unworthy of a place 
in the religious code of an enlightened people. 

It is not essential to the faithful performance of the proper 
work of the ministry that the pulpit should array itself in 
offensive antagonism to fixed theologic faiths, or even to vulgar 
religious prejudices; but the interests of the great mass of 
working-people require that the influence of the pulpit should 
be extended over a wider field, that its teaching should have 
broader scope. To be effective it must be able to instruct and 
to entertain. Its function is to educate the people in whatever 
pertains to social philosophy, ethics, or religion; to hold up 
worthy ideals, to awaken and cultivate pure and refined senti- 
ment ; in short, to help make the world better here and now. 

The question is, Shall the minister apply himself and the 
agencies under his control to the culture of the people in that 
broad sense essential to the development of a perfect manhood ? 
shall it be his work to lead them into better ways of living and 
to fashion character in the mould of ideal conceptions ? or shall 
he continue, along with fortune-tellers and interpreters of 
dreams, the professor of a mediaeval and mysterious art by 
which, through the device of a combination of ceremony and 
faith in things unseen, the soul is made happy in the belief that 



358 THE DISTEIBUTION OF WEALTH. 

it has escaped the wrath of an angry Deity in the world to 
come ? — a peculiar scheme of salvation devised in the cloister, 
remarkable chiefly for the fact that it is instantaneous in its re- 
sults and dispenses with the necessity of both mental culture 
and moral refinements as conditions of divine favor. 

An able writer, M. Maurice, in a recent article truly says, 
"There are few happy people. And why? The answer is a 
plain one, and goes straight home to our civilization : we do not 
educate for happiness. In no direction do we find our Church 
or our school system permeated with the idea that a young 
person to be permanently happy must understand and be true 
to the laws of nature. The Church, as a rule, has given over 
any eifort to construct a happy life, and bends all her energies 
to point out a possible happy hereafter. The state has con- 
structed a system of education which never refers to hajDpiness 
as an end. Moral purpose and our dependence upon ethical 
principle is left to our schools. The parochial schools confuse 
religion and a noble life, and aim for the most part only to save 
souls after death. In all directions the young are not trained 
to know how to be happy. 

" The end of all education should be to create (1) character, 
(2) homes, and (3) citizens. "When we point the enthusiastic to 
education as the only possible remedy for ills of any sort, it is 
sure to be a disappointment. One-half the world is either 
concocting a panacea or is swallowing one. Our social panaceas 
are exactly as valuable as our medical cure-alls. You must live 
rightly to be whole or healthy ; you must learn rightly and be 
made rightly in order to be good and happy in your own soul 
and your relation to yourself, in your family, in your relation to 
your children and partner, and in the state as a citizen." 

The ministry, as a body, lack neither earnestness nor zeal. 
They are, however, the victims of an established routine that 
cramps educational growth and in no small degree impairs their 
capacity as leaders in any field of modern thought. Those 
among them who possess more than average ability or inde- 
pendence of character are often disposed to disregard the nar- 
row limitations that restrict their influence and their usefulness 
within a prescribed sphere, and become, in a broader sense, 
educators of the people ; and gradually, but slowly, the work 



THE DISTEIBUTION OF WEALTH. 359 

of the ministry takes wider scope. But tbey labor under the 
embarrassment of being compelled to introduce new ideas by 
stealth, arrayed in the unbefitting attire of conventional phrase- 
ology already worn threadbare in the service of a superannuated 
theology. The hold of the pulpit upon the masses grows weaker 
and weaker. Its success in diffusing religious sentiments, and 
in establishing a high standard of ethics among tbe people, falls 
far short of the measure of expended effort. 

The Church must get its dead theology out of the way. It 
must cease to antagonize demonstrated truths ; it must cease to 
magnify absurd dogmas and to belittle ethics. "While it has in 
a measure ranged itself in line with modern thought, it is not 
yet in a position to do the work that belongs to it to do. The 
sooner the ministry in general are awakened to a clear percep- 
tion of the true condition of affairs the better it will be for the 
Church, considered merely as a temporal organization, and the 
better it will be for the growth and spread of Christian senti- 
ment and for the good order of society. 

The social and moral training of the masses of the people 
cannot be effectively carried forward without the aid and active 
co-operation of an intelligent ministry. The economic forces 
which determine the material welfare of the people do not 
operate independent of ethics. Improved physical conditions 
are in great measure dependent upon improved education, and 
an advance in moral and religious sentiment depends upon im- 
proved physical conditions. The mental and physical cannot 
be divorced ; ignorance and immorality beget poverty, and 
poverty begets ignorance and vice. 

Any system of economics that fails to take account of the 
moral and intellectual education of the people, and of the influ- 
ences and agencies by which education is promoted or retarded, 
rightly or wrongly directed, omits a leading and controlling 
factor in the problem. 

We readily recognize in the Mormon, Moslem, or Hindoo 
religions forces that stimulate, retard, or modify industrial 
civilization. The institutions in our midst exercise a corre- 
sponding influence ; and improvement in industrial or economic 
conditions of the people of our own country depends also in 
great measure upon the Church, and the manner in which it 



360 THE DISTRIBUTION OF WEALTH. 

may perform its part in promoting the general culture of tlie 
people. 

Even where the Church has in great measure lost its potency 
as a direct moral force, and where it neglects its proper work as 
the chief agency in promoting the education of the people, it 
still remains a leading factor in our civilization, if for no other 
reason because of the ground it occupies and from which it in 
great measure excludes other agencies. The Church is a power 
by reason of its inertia alone. It is interwoven with every 
fibre of the social fabric, associated with the ancient traditions 
and popular conceptions that unite a people into a society of 
common ideas, faiths, and tendencies ; and the great problem of 
economic reform and social development cannot be worked out 
without regard to the Church and its teachings. 



INDEX, 



A. 

Agriculture, cause of low prices in, 
107, 120, 240. 
in thirteenth century, 14. 
product of, in United States, 36. 
profits of, 60, 67. 
statistics of, 36. 
wages in, 14, 60, 86, 95. 
Atkinson, Edward, 9, 19, 21, 36, 50, 
71, 155, 206, 209, 218, 261, 306. 



Badeau, Adam, on agricultural la- 
borers in England, 14. 
on land monopoly in Great 
Britain, 78. 
Bastiat's law of diminishing returns, 

306. 
Bessemer steel, 251. 
Bonds of United States, 53, 83, 103. 
Building and loan associations, 181, 
186, 188. 

C. 

Cairnes, Professor, 191. 
Capital, foreign, invested in the 
United States, 129, 192. 

of Great Britain, how invested, 
81,229. 

of United States, 81. 

profits on, 57, 65, 262. 

waste of, 57. 
Carey, Henry C, 24. 
Carnegie, Andrew, 16, 21, 28. 
China, wages in, 89. 
Church, work of, 349-360. 



Coinage, amount of, 99. 
Competition may increase prices, 
286. 

universal character of, 30. 

with ignorant laborers, 148, 153, 
300, 325. 
Conditions, changed, 25. 
Connecticut, statistics of, 64. 
Corn crop, 117. 
Credits, 143, 153, 165. 

in United States, 167. 

limitations of, 164. 

substitute for money, 100. 

taxation of, 221. 

use of, 158. 
Currency, contraction of, 103, 106. 

statistics of, 103. 

D. 

Depressions of industry contempo- 
raneous in diflerent countries, 
260. 
Distribution of products, cost of, 
53, 54. 
of wealth, 75, 127. 
Dodge, J. K., on agricultural prod- 
ucts, 37. 
Duties on imports, 194. 

by whom paid, 197. 

E. 

Education, 342. 

industrial, 241, 331. 
Ethics, 358. 
Exports, domestic, 110. 

of wheat and flour, 111. 

301 



362 



INDEX. 



Farmers, loans to, 317. 

Fisheries, 48. 

Food in Europe and United States, 

88. 
Forestry, 48. 
Free trade, 233, 261. 

true policy for England, 246. 

G. 

George, Henry, on increase in pro- 
duction, 11. 

on taxation, 274. 

on usury, 170. 

on wages, 305. 

writings of, 23. 
Gold and silver product, 51. 
Great Britain, foreign investments 
of, 81. 

free trade in, 246. 

imports of, 229. 

incomes in, 78. 

investments of, in United States, 
129, 192. 
Greeley, Horace, 24. 

H. 

Homes of working-men, 84, 187. 
Houses in England and Ireland, 78. 
Hoyt, Henry M., 24, 250. 

I. 

Illinois, product of, 42. 
Immigration, 244, 271. 
Income tax, 78, 216. 
Industrial bureau required, 266. 
Industries, table of, 62. 
Inheritance, law of, 20. 
Insurance by the State, 190. 
Interest, accumulations of, 152, 182. 

effect of, 183. 

equity of, 168. 

illustration of, 178 

in Holland, 324. 



Interest; low rate of, as a remedy for 
low wages, 818, 388. 
policy of, 172. 
relation of, to price of land, 184. 

of, to savings, 317. 
to dependent classes, 189. 



K. 



Kellogg, Edward, 24. 



L. 



Labor and capital, conflicting interest 
of, 313. 
capacity of, 9, 28, 133, 141. 
combinations of, 326. 
cost of superintendence of, 65. 
dependence of, 27, 124, 292, 300. 
distribution of, 30, 83. 
earnings of, compared to prod- 
uct, 64. 
mobility of, 204. 
waste of, 207. 
Land, distribution of, in France, 81. 
in Great Britain, 78. 
in United States, 83. 
limitation on ownership of, 274, 

339. 
monopoly in, 76, 81, 339. 
public, exhausted, 280. 
taxation of, 218. 
Liquors and tobacco, use of, 161. 

M. 

Malthus, T. E., 5, 308. 
Manufactures, product of, 49, 56. 

profits of, 57, 237. 

statistics of, 48, 63, 70. 
Massachusetts, statistics of, 37, 40, 

44, 63, 92. 
Maurice, M., 358. 
Meat product, 38, 48, 92, 111. 
Mill, J. S., on effect of inventions, 12. 

on free trade, 233. 

on law of rent, 311. 



INDEX. 



363 



Mill, J. S., on recuperating power 
of labor, 132. 

on usury, 169. 

on wage-fund" theory, 293. 

writings of, 24. 
Mining, 48. 
Ministers, 852. 
Money, statistics of, 97. 

uses of, 97, 160, 178. 
Monopolies, artificial, 282. 

in land, 279, 339. 

in wealth, 288. 

natural, 274, 335. 
Mortgages in Europe, 259. 

in United States, 82, 167. 



N. 



Nimmo, statements of, 37, 48. 



Oats, 118. 



P. 



Panics, cause of, 166. 
Patent rights, 283, 337. 
Paternalism, 270. 
Patten, Simon IST., 321. 
Pensions, 210. 
Personal-service classes, 67. 
Pig-iron, 252. 
Political economy, 5. 
Potatoes, 118. 
Prices, comparison of, 112. 

effect of fall in, 156. 

fifty years ago, 94. 

in thirteenth century, 54. 
Product, total, of United States, 51, 

54. 
Production, 19, 36. 

regulated by consumption, 29, 
143, 291. 
Professional-service classes, 67. 
Profits, how limited, 315, 318. 
Property, what is, 115. 
Protection, 200, 225. 



Protection, history of, 246. 

principle involved in, 234. 
Public debt, payment of, 211. 

lands, pasturage of, 203. 

R. 

Kailways, earnings of, 56. 

limit on charges by, 277, 336 

value of, 278. 
Pveligion, 349. 
Eent, law of, 311. 
Kicardo, 5, 294, 311. 
Kogers, Thorold, 12. 



S. 



eftect of, 148, 149. 

in credits, 153. 

in money means deferred con- 
sumption, 145. 

limit of, 126. 

represented by durable property, 
125, 147. 

use of spirits and tobacco, effect 
of, on, 161. 
Shearman, T. G., 76. 
Sheep husbandry, 200. 
Silver, legislation concerning, 100. 

statistics of, 97, 100. 
Standard Oil Company, 283. 
State may loan money, 189. 
Steel rails, 254. 
Strikes, 326, 329. 



Talmud, 7. 

Tariff commission required, 266. 

revenues, 195. 
Taussig, F. W., 24. 
Taxation, 192. 

burden of, 205, 208, 214. 

direct, 217. 

exemptions from, 250. 

indirect, 194, 213. 



364 



INDEX. 



Taxation, internal revenue, 214. 

on credits, 221. 

on incomes, 210. 

on land, 218. 

on spirits and tobacco, 214. 
Taxes, amount of, 59, 75. 
Theology, 350, 352, 354, 358. 
Thompson, K. W., 24. 
Tobacco, 161, 
Trade, international, 225. 
Transportation, cost of, 54. 
Trusts, 289. 

U. 

"Usury laws, 174. 
George on, 170. 
Mill on, 169. 
Wayland on, 168. 



Yalue, elements of, 113. 

fluctuations of, 30, 107. 

how determined, 116. 
Vote, commercial, 342. 

W. 

"Wage-fund theory, 293, 310. 
"Wages, high standard of, desirable, 

154. 
how determined, 147, 293, 301, 

313, 325, 



Wages in agriculture, 14, 60, 86, 95. 

in China, 89. 

in 1850, 94. 

in Europe, 86. 

in new countries, high, 130. 

in thirteenth century, 91. 

in United States, 55, 60, 62, 72, 
85, 89, 90, 254, 264, 300. 

limited by statute, 333. 

of skilled and common work- 
men, 149. 

one hundred years ago, 90, 93. 

relation of, to consumption, 129. 
to interest, 130. 

tables of, 53, 55, 60. 
Walker on, 294. 
Wayland, Francis, 24, 165, 168. 
Wealth, aggregation of, 18, 63, 76, 
78, 212, 284. 

distribution of, 75, 127. 

limitations of, 134, 136. 

necessity of, 142. 

of United States, 73. 

production controlled by, 134. 

remedy for aggregation of, 141. 

stationary state of, 121, 129. 
Wheat, prices of, 94, 117. 

production of, 108, 109, 112. 
Working-man, education of, 342. 

homes of, 84. 

status of, how determined, 348. 



THE END. 



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